Linde plc (LIN) | Takeaways from LIN's USGC Investor Field Trip—High Confidence in Clean Energy Growth

We maintain our estimates, and continue to expect 2Q23 will be another quarter of growth for LIN (EBITDA +8% Y/Y to $2.96B), with full-year results supported by a stable earnings outlook in 2H23 while we expect most other names under our coverage will face declines. We see LIN EBITDA +8% Y/Y for the full-year 2023 to nearly $11.8B, helped by its business model, which is anchored by a strong project backlog, long-term contracts, and no major improvement in economic demand.

LIN highlighted its USGC network that was built over the last three decades and is well-positioned to service hundreds of customers with clean energy solutions that align with its production facilities, pipelines, hydrogen liquefaction assets, and storage network. LIN showcased its internal talent, which showed a breadth of knowledge, experience, and passion for growth, as well as its ATR technology which has been operational for four years.

LIN reiterated its ~$30B investment opportunity in the US for Clean Energy projects. We believe the company can add $2B + annually to its project backlog, which should boost its normal EPS growth potential from ~10% growth to mid-teens+ starting mid-decade. With an additional $20B of clean energy opportunities overseas, we believe the fundamental growth potential remains underappreciated, which could drive further multiple expansion.

LIN reiterated its focus on helping its customers work towards their decarbonization goals. LIN is enabling CO2 storage in areas with favorable geology, with leading storage providers in the industry (ExxonMobil, BP, Oxy). LIN identified two key growth pathways: 1) decarbonizing existing H2 production, and 2) new hydrogen end markets. The tour showcased its Clear Lake ATR and its strategy to capture carbon molecules for its customer to use in their manufacturing process.

LIN highlighted its Autothermal Reforming (ATR) technology, a process for producing syngas, which is comprised of CO, CO2, and hydrogen. ATR is one of the most cost-effective solutions to produce low-carbon hydrogen at scale. LIN's ATR at Clear Lake is one of a few in operation and is designed to increase efficiency for its on-site customers. LIN sends its CO and CO2 to its on-site customers, which use it to produce acetic acid and methanol.