Linde (NASDAQ:LIN) reported record second-quarter sales and earnings per share, while expanding its sale-of-gas project backlog to a record $8.1 billion following a new U.S. electronics contract. The industrial-gases company also said it expects to start more than 20 projects during the remainder of 2026, representing approximately $1.3 billion of investment.
Chief Executive Officer Sanjiv Lamba said sales and EPS both increased at near-double-digit rates during the quarter. However, he said the company was not satisfied with its margin performance, citing pressure in its U.S. home care business and a sales mix that included higher volumes of lower-margin equipment and hard goods.
Second-Quarter Results and Outlook
Excluding those items, underlying sales increased 4%, split between higher volume and pricing. Nearly half of the volume increase came from project startups in Asia-Pacific and the Americas, while the balance reflected organic growth in the U.S., China, Korea, India and the company’s advanced materials business. Pricing rose 2% from a year earlier, broadly tracking local inflation, White said.
Operating margin was 29.5%, down 60 basis points from the prior-year period, or down 30 basis points excluding cost pass-through. Adjusted EPS was $4.50, up 10% from a year earlier, aided by higher net income and a lower share count.
Linde guided for third-quarter EPS of $4.45 to $4.55, representing growth of 6% to 8% from a year earlier. The outlook assumes no year-over-year currency impact but includes a 1% sequential foreign-exchange headwind. The company raised the lower end of its full-year EPS outlook by $0.10, projecting $17.70 to $17.90, or growth of 8% to 9%, excluding an assumed 1% foreign-exchange tailwind.
White said the company is not yet incorporating the second quarter’s improvement in base volumes into its forward outlook. At the midpoint, third-quarter EPS is expected to rise $0.05 sequentially excluding foreign exchange, reflecting actions underway to improve performance.
Margin Pressure Centers on U.S. Home Care
Lamba said the Americas segment was the primary source of margin pressure, particularly the U.S. home care business, known as Lincare. He said continued cost inflation and policy changes have outweighed the benefits of portfolio pruning efforts.
According to Lamba, Americas margins excluding the home care business would have risen 20 basis points, excluding cost pass-through. White said the home care profit headwind was higher than an analyst’s estimate of $30 million for the quarter, without providing a specific figure.
The company has installed a new management team at Lincare and is pursuing operational improvements, productivity initiatives and additional portfolio actions. Lamba said Linde is also evaluating the strategic fit of the business, “both in part and as a whole,” while seeking to improve its performance.
Higher sales of hard goods in the U.S. packaged-gases business also reduced margins, though management characterized the trend as a positive sign for manufacturing activity. U.S. hard-goods sales increased by a double-digit percentage from a year earlier. In Asia-Pacific, margins were affected by lower-margin equipment sales to electronics customers, which Linde said can support future gas-sales opportunities.
Electronics Backlog Supports Growth Plans
Electronics remained Linde’s fastest-growing end market, supported by project startups and demand tied to artificial-intelligence-related hardware. The company added $1 billion of new U.S. electronics wins to its backlog to support advanced-node semiconductor fabrication investments. Linde has begun building plants under reimbursable letters of intent while final supply contracts are completed.
Lamba said Linde expects electronics to remain its largest backlog contributor and one of its fastest-growing markets. The company is pursuing additional opportunities in the U.S., Taiwan, Korea and China. Separately, Linde’s Taiwan joint venture won projects requiring approximately $800 million of investment in air separation and hydrogen production units for new semiconductor fabrication and advanced-packaging facilities.
The company expects its sale-of-gas backlog to still end 2026 with “an eight handle,” even after approximately $1.3 billion of project startups reduce the current $8.1 billion balance.
Management said manufacturing was the fastest-growing industrial market, particularly in the U.S., where aerospace and data-center-related construction supported activity. Aerospace represented more than one-third of manufacturing growth during the quarter. Manufacturing volumes also increased in Asia-Pacific and the Americas.
Metals and mining and chemicals and energy each grew at low-single-digit rates. Metals and mining was solid in the U.S. and Brazil, while chemicals growth was primarily driven by backlog contributions in Asia-Pacific. Lamba said these markets were otherwise broadly flat across other regions.
Capital Deployment, Helium and Space Opportunity
Linde deployed $6 billion of capital year to date, split evenly between business investments and shareholder returns. Of that amount, $1.9 billion was directed to secured growth through acquisitions and project-backlog investments. White said the company expects secured growth to remain a significant use of capital given the record backlog, acquisition opportunities and project pipeline.
The company increased its expected capital spending, with the additional investment tied to backlog wins and base capital expenditures supporting commercial-space customers. White said commercial-space customers may use a combination of sale-of-gas arrangements and customer-owned plants operated and maintained by Linde, particularly for atmospheric gases. He said Linde is not seeing the same dynamic in hydrogen supply.
Lamba said the company remains on track to pursue a billion-dollar-plus space-market opportunity by 2030.
On helium, Lamba said Linde has maintained supply to contracted customers amid disruption related to the Middle East and has signed new long-term customer contracts. He said improved pricing has been partly offset by dislocation costs, which have limited the immediate margin benefit. Linde expects a more normalized helium market next year, though the pace will depend on resolution of issues affecting the Strait of Hormuz and the resumption of production and logistics flows from Qatar.
About Linde (NASDAQ:LIN)
Linde (NASDAQ: LIN) is a multinational industrial gases and engineering company that supplies gases, related technologies and services to a wide range of industries. The company traces its current form to the 2018 combination of Germany’s Linde AG and U.S.-based Praxair, creating one of the largest global providers of industrial, specialty and medical gases. Linde’s business model centers on production, processing and distribution of gases as well as the design and construction of the plants and equipment needed to produce them.
Core products and services include atmospheric and process gases such as oxygen, nitrogen and argon; hydrogen and helium; carbon dioxide; and a portfolio of higher‑value specialty and electronic gases.
