Linde plc (LIN) Earnings Call Transcript

First actually we've got a confusing quarter for one of my absolute favorite company. It's a company called Linde, L-I-N-D-E. It's an industrial gas distributor. It's the stock that we own for our charitable trust. It's been one of the greatest long-term performers the trust has ever had. The numbers are a little confusing, because Linde's business reporting is a little more complex than most industrials. As we explained to CNBC Investing Club people, Linde seemed to miss the headline sales number but that's only because their contracts with customers allow for variable pricing. And that makes -- so if there's a big swings in the cost of energy, well, it doesn't really impact their bottom line. It doesn't impact you as a shareholder, they're passing them on to clients. When you look at Linde's underlying sales growth, which strips out these variable costs, it was actually up 6% year-over-year plus management pushed the huge margin improvements through, and they've got some major clean energy opportunities, especially green hydrogen, which I know you care greatly about. But don't take it from me. Let's check in with Sanjiv Lamba. And he is the CEO of Linde. He has better sense of what's going on with the company. So let me welcome him back to Mad Money.

Thanks, Jim. Good to be back.

Okay. Sanjiv, you are a complex company, but I want to boil that with some simple things. When it comes to some of the true great themes of our world right now, decarbonization, making semiconductors, staying so that we have a planet that can use green hydrogen, not just dirtier hydrogen. These will all come back to you. How could one company be so central for so many different industries?

Jim. The underlying principle of our resilience comes from the fact that we serve many different industries and different gas applications for each of those industries. And that is really where we're actually serving the electronics market, with every fam that happens, any major player, we are a supplier to them. We want to make sure they're successful. We play a small but critical role in most manufacturing processes. So whether we introduce blue and green hydrogen for decarbonization of different industries or whether it's using carbonation for food and beverage, where you pick up a nice beer or a coke you know that it's great because we put some gas into it and it brings it to life. I mean that resilience comes because we are spread across this vast number of end markets that we serve.

But I'll mention say carbon sequestration, and that's Linde. I think we like to think it's lot of companies but it's you.

It is. So let's talk about decarbonization. We are excited about the developments here...

And I was going to say that your passion comes through everywhere that this is really an important initiative.

It is. We feel we have a role to play Jim. And really, what we have to say is Linde has something to offer across the entire hydrogen value chain. So let's talk about decarbonization. I'll give you headline numbers and I'll talk a little bit deeper about what's happening. Headline numbers, we went out to the market and said, we believe over the next 10 years, we'll make investment decisions of $50 billion, that's a big opportunity in our industry, certainly a big opportunity for us at Linde. So we're excited about that. But there are use cases that are real. This is about producing blue and green hydrogen to make sure we're enabling decarbonization to happen. Where does it happen? It can happen in mobility. So essentially, wherever you've got a large payload, it could be a truck, it could be bus.

Well Trucking?

Yes.

For real.

Yes, for real. It's only a question of time. It's a question of a couple of years when you get to a point where you've got a large technology development that allows long distances, but short refill times, that's the key. That's the Holy Grail. A 1,000 kilometers they say with a 15-minute fill time, 40 tons of truckload there.

All right. How about if I go to the Gulf and I see what's going on there, will I see Linde?

Absolutely, you will. So we're working in the Kingdom of Saudi Arabia. We see -- probably potentially the largest carbon catcher sequestration project in the world. We, along with SLB, are actually working with Aramco to develop that. We're in feed stage right now, big investment, 54 million tons per annum of CO2, that's a lot of CO2 sequestered. First phase, we are developing 11 million tons.

Now then I go to Exxon and I go to Texas, Louisiana, do I see you?

You absolutely do. Great partnership with Exxon. We are working to develop the OCI Project. We have some CO2 coming out of that. Exxon is going to sequester that for us. That's what partnership means in decarbonization, working together to make sure we make the planet better and also have an economic case that works.

Okay. India, South Korea?

Absolutely. You'll see us in India. We're a leading player there, have been for nearly 90 years and a lot of new growth coming in India. India is the rising star in Asia at the moment, and we are well present in the market. South Korea, some of our biggest investments, about $1.5 billion for Samsung over the last many years.

Okay. So I go out to Arizona and I hear the TS -- the Taiwan Semi is a little away the factory, but you tell me don't worry because they need you earlier on.