(Archived) Praxair Reports Third-Quarter 2017 Results

• Solid financial performance
  • Sales of $2.9 billion, 8% above prior-year quarter
  • $0.8 billion of operating cash flow or 27% of sales
  • Record free cash flow of $0.5 billion, 15% above prior-year quarter
  • EPS of $1.45; adjusted EPS of $1.50
  • Raised full-year adjusted EPS guidance

• Execution of our core strategy
  • Volume growth +5%, price attainment +1% vs. prior-year quarter
  • Backlog $1.5 billion; includes four new project wins in the U.S. and Asia

• Continued progress on merger with Linde AG
  • Strong Praxair shareholder support in favor of merger with Linde AG; 99% of votes cast approved the deal
  • German offer minimum acceptance threshold lowered to 60%; offer period extended through November 7, 2017

DANBURY, Conn., October 26, 2017 – Praxair, Inc. (NYSE: PX) reported third-quarter net income and diluted earnings per share of $419 million and $1.45, respectively. These results include transaction and other costs of $14 million after-tax, or 5 cents of diluted earnings per share, primarily related to the proposed merger with Linde AG. Excluding this charge, adjusted net income and diluted earnings per share were $433 million and $1.50, respectively.

Praxair’s sales in the third quarter were $2,922 million, 8% above the prior-year quarter. After adjusting for positive currency translation and cost pass-through, sales grew 6%, driven by higher volumes across all geographic segments including new project start-ups, growth in all end-markets, and price attainment.

Reported operating profit in the third quarter was $626 million, 26% above the prior-year quarter. Excluding the impact of transaction and other costs, adjusted operating profit was $642 million, 8% above prior-year quarter. Reported operating profit as a percentage of sales was 21.4% and adjusted operating profit as a percentage of sales was 22.0%. EBITDA margin was 32.0% and adjusted EBITDA margin was 32.6%.

The company generated strong third-quarter cash flow from operations of $794 million, 27% of sales. After capital expenditures of $320 million, free cash flow was $474 million, up 15% over the prior-year quarter. The company paid $225 million in dividends and net debt decreased by $202 million.

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair employees delivered another strong quarter with operating profit growing 8% and record free cash flow of $ 0.5 billion.

“The third quarter extended prior trends with growing demand in North America, Europe and Asia, but continued weakness in South America. Furthermore, our backlog grew to $1.5 billion with the addition of four new long-term on-site supply agreements in the U.S. and Asia. Most of this backlog supports the significant energy and petrochemical expansions in the U.S. Gulf Coast although we continue to see more opportunities in Asia, especially in the electronics end-market. We remain confident in our ability to win additional projects as these markets continue to develop.

“Additionally, during the third quarter, Praxair shareholders approved our business combination with Linde AG with 99% of votes cast in favor of the merger. Currently, the business combination remains subject to the satisfaction of all other transaction closing conditions, including successfully completing Linde plc’s exchange offer for Linde AG shares, and the receipt of all regulatory approvals.”

For fourth-quarter 2017, Praxair expects diluted earnings per share in the range of $1.45 to $1.50, excluding transaction costs related to the proposed merger.

For full-year 2017, Praxair expects adjusted diluted earnings per share to be in the range of $5.78 to $5.83, with the midpoint up $0.12 versus prior guidance. This range excludes transaction costs related to the proposed merger and a pension settlement charge. Full-year capital expenditures are expected to be approximately $1.4 billion.

Following is additional detail on third-quarter 2017 results by segment.

In North America, third-quarter sales were $1,518 million, 4% above the prior-year quarter excluding cost-pass through and currency translation. Sales growth was driven mainly by stronger volumes to the electronics, aerospace, metals and food & beverage end-markets and higher price. Operating profit was $386 million, 6% above the prior-year quarter.

In Europe, third-quarter sales were $407 million, 11% above the prior-year quarter. Excluding currency and cost pass-through, sales grew 5% from the prior-year due to higher volumes, primarily led by the metals, food & beverage and manufacturing end-markets and higher price. Operating profit was $78 million, 8% above the prior-year quarter.

In South America, third-quarter sales were $389 million, 3% above the prior-year quarter. Excluding positive currency translation, sales increased 2% versus the prior-year driven by higher volumes to chemicals and metals end-markets and project start-ups. Operating profit was $63 million.

Sales in Asia were $451 million in the quarter, up 15% from the prior-year driven by higher volumes in China, Korea and India, project start-ups and 2% price attainment, driven mostly by China. Operating profit was $88 million, 29% above the prior-year quarter.

Praxair Surface Technologies had third-quarter sales of $157 million, up 4% excluding positive currency impact. Sales growth was driven primarily by aerospace coatings. Operating profit was $27 million.

Adjusted amounts, EBITDA, free cash flow and after-tax return on capital are non-GAAP measures. See the attachments for a summary of non-GAAP reconciliations and calculations of non-GAAP measures.

Attachments: Summary Non-GAAP Reconciliations, Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures.

A teleconference about Praxair’s third-quarter results is being held this morning, October 26, 2017 at 11:00 am Eastern Time. The number is (631) 485-4849 – Conference ID: 96035710. The call is also available as a webcast live and on-demand at www.praxair.com/investors. Materials to be used in the teleconference are also available on the website.

Additional Information and Where to Find It

In connection with the proposed business combination between Praxair, Inc. (“Praxair”) and Linde AG (“Linde”), Linde plc has filed a Registration Statement on Form S-4 (which Registration Statement was declared effective on August 14, 2017) with the SEC that includes (1) a proxy statement of Praxair that also constitutes a prospectus for Linde plc and (2) an offering prospectus of Linde plc to be used in connection with Linde plc’s offer to acquire Linde shares held by U.S. holders. Praxair has mailed the proxy statement/prospectus to its stockholders in connection with the vote to approve the merger of Praxair and an indirect wholly-owned subsidiary of Linde plc, and Linde plc has distributed the offering prospectus to Linde shareholders in the United States in connection with Linde plc’s offer to acquire all of the outstanding shares of Linde. Linde plc has also filed an offer document with the German Federal Financial Supervisory Authority (Bundesanstalt fuer Finanzdienstleistungsaufsicht) (“BaFin”) which was approved for publication by BaFin on August 14, 2017, published by Linde plc on August 15, 2017, and amended by Linde plc on October 23, 2017 (the “offer document”). Praxair’s stockholders approved the merger at Praxair’s special meeting held on September 27, 2017. The consummation of the proposed business combination remains subject to regulatory approvals and other customary closing conditions.

INVESTORS AND SECURITY HOLDERS OF LINDE ARE URGED TO READ THE OFFER DOCUMENT REGARDING THE PROPOSED BUSINESS COMBINATION TRANSACTION AND OFFER BECAUSE IT CONTAINS IMPORTANT INFORMATION. You may obtain a free copy of documents filed by Praxair, Linde and Linde plc with the SEC on the SEC’s Web site at www.sec.gov. The offer document is available for free at Linde plc’s Web site at www.lindepraxairmerger.com. Furthermore, the offer document is available at BaFin’s Web site for free at www.bafin.de. You may also obtain a copy of the offer document from Deutsche Bank Aktiengesellschaft, Taunusanlage 12, 60325 Frankfurt am Main, Germany for distribution free of charge (also available from Deutsche Bank Aktiengesellschaft via e-mail to dct.tender-offers@db.com or by telefax to +49 69 910 38794).

This document is neither an offer to purchase nor a solicitation of an offer to sell shares of Linde plc, Praxair or Linde. The final terms and further provisions regarding the public offer are disclosed in the offer document and in documents filed with the SEC. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted. The information contained herein should not be considered as a recommendation that any person should subscribe for or purchase any securities.

No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act of 1933, as amended, and applicable European and German regulations. The distribution of this document may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Subject to the exceptions described in the offer document and to any exceptions potentially granted by the respective regulatory authorities, no offering of securities will be made directly or indirectly in any jurisdiction where to do so would be a violation of the respective national laws.

Forward-looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the expected timing and likelihood of the completion of the contemplated business combination with Linde AG, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals that could reduce anticipated benefits or cause the parties to abandon the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement; the ability to successfully complete the proposed business combination and the exchange offer, including satisfying closing conditions; the success of the business following the proposed business combination; the ability to successfully integrate the Praxair and Linde businesses; the possibility that the requisite number of Linde shares may not be tendered in the public offer; the risk that the combined company may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the GAAP or adjusted projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company’s latest Annual Report on Form 10-K filed with the SEC and in the proxy statement/prospectus and the offering prospectus included in the Registration Statement on Form S-4 (which Registration Statement was declared effective on August 14, 2017) filed by Linde plc with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.