Abby, thank you. Good morning, everyone, and thanks for attending our 2026 second-quarter earnings call and webcast.

I'm Juan Pelaez, Head of Investor Relations, and I'm joined this morning by Sanjiv Lamba, Chief Executive Officer, and Matt White, Chief Financial Officer. Today's presentation materials are available on our website at linde.com in the Investors section.

Please read the forward-looking statement disclosure on page 2 of the slides and note that it applies to all statements made during this teleconference. The reconciliations of the adjusted numbers are in the appendix to this presentation.

Sanjiv will provide some opening remarks, and then Matt will give an update on Linde's second-quarter financial performance and outlook, after which we will wrap up with Q&A. Let me turn the call over to Sanjiv.

Thanks, Juan, and good morning, everyone. During the second quarter, we achieved record sales and EPS levels, with both growing at near double-digit percent, while increasing the backlog by $1 billion to a record $8.1 billion after securing a new electronics win in the US.

In addition, the backlog project pipeline remains healthy, with several new project opportunities under development. For the remainder of the year, we're expecting to start up more than 20 projects that add up to approximately $1.3 billion in investments.

Even after accounting for these startups and based on the opportunities I see today, I expect our sale-of-gas backlog to finish the year with an 8 handle, underscoring the continued strength of our long-term growth outlook. While these results demonstrate the strength of our core business and the future growth prospects, we are not satisfied with our margin performance for this quarter.

Operating margins excluding cost pass-through declined approximately 30 basis points year over year, primarily driven by the Americas segment. Some of this is due to higher equipment and hardgoods sales in our package business, which actually I view as a good sign of US manufacturing recovery.

The majority is driven by the US healthcare business. Even though we have been actively pruning this portfolio, it simply has not been enough to overcome the continued headwinds led by higher cost inflation and policy changes.

We have a series of actions underway, and I fully expect sequential improvement into the third quarter. At the same time, we continue to evaluate the strategic fit of this US healthcare business within Linde, both in part and as a whole, while remaining focused on improving its performance and ensuring it earns its place in the portfolio.

Matt will speak more to the numbers, but I remain confident in our long-term margin expansion story. Now I'd like to touch on some growth trends, which can be found on slide 3.

Consumer-related markets grew versus prior year and sequentially. Healthcare and food and beverage grew along with demographic trends and consumption, with stronger sequential growth related to beverage seasonality.

As expected, electronics is the fastest-growing end market, with a combination of project startups and higher demand tied to hardware associated with AI. As I mentioned earlier, we added $1 billion of new electronics wins to the backlog to support the expansion of advanced node fabs in Western US.

Consistent with other backlog projects, we've already begun constructing the plants under reimbursable LOIs while the supply contracts were finalized. I'm pleased to see this addition to our existing network of plants in Arizona, and look forward to winning a few more large opportunities that we're currently pursuing.

Not included in the backlog are a couple of electronics wins via Taiwan JV, which will invest approximately $800 million to build, own, and operate ASUs and hydrogen production units to supply to new semiconductor fab and advanced packaging facilities there. Overall, I expect electronics to remain our largest backlog contributor and one of the fastest-growing markets for the foreseeable future.

Moving to industrial-related markets, manufacturing remains the fastest-growing market. We experienced volume growth across APAC and the Americas, although the US is still the primary driver, with both aerospace and construction activity related to data centers.

In fact, aerospace accounted for more than a third of the manufacturing growth during the quarter. Both metals and mining and chemicals energy markets grew low single digits.

Metals and mining activity was solid in the US and Brazil, and most of the chemicals growth relates to project backlog contributions in APAC. Aside from these regions, both end markets remain flattish across other geographies.

In summary, we've lapped the more difficult comps and are starting to see green shoots of growth across certain geographies and end markets. Furthermore, the project backlog reached a new record from the large-scale electronics wins, and we anticipate some further base CapEx investments to support our commercial space customers.

Regardless of the current challenges, you can be assured that the entire Linde team is focused on being the best-performing industrial gas business globally. I'll now turn the call over to Matt to walk through our financial results.

Thanks, Sanjiv. Please turn to slide 4 for the consolidated results.

Sales of $9.3 billion rose 9% from prior year and 6% sequentially. Versus prior year, FX was a 2% tailwind, while acquisitions and engineering each contributed 1%.

Cost pass-through rose 1% on higher power in all segments, but was partially offset by lower natural gas for US hydrogen. Excluding these items, underlying sales rose 4%, split between higher volume and price.

Almost half of the volume increase relates to project startups in APAC and Americas. The remaining is driven by organic growth in the US, China, Korea, India, and the advanced materials business.

While aerospace and electronics continue to lead, industrial end markets are improving in select geographies, especially the US. The price increase of 2% was broad-based across all geographies and generally tracked with local inflation.

Sequentially, underlying sales increased 4%, from 3% volume and 1% pricing. More than half of the volume increase relates to seasonal factors, with the remainder being organic.

Operating margins of 29.5% decreased 60 basis points from prior year, or 30 basis points when excluding the impact of cost pass-through. As Sanjiv mentioned, the US healthcare business negatively impacted the Americas.

Excluding this, margins would have increased. Regardless, actions are underway to improve.

Separately, US hardgoods sales are up double-digit percent from prior year. While this mix is dilutive to margins, it could bode well for US manufacturing recovery.

Finally, the APAC erosion is mostly due to lower-margin equipment sales for electronic customers. Overall, we expect many of these margin headwinds to be temporary, and thus recover in the coming quarters.

Operating profit rolled down to an EPS of $4.50, or 10% over prior year, from a combination of net income and lower share count. Slide 5 provides an overview of capital management.

The operating cash flow trend shows moderate year-over-year growth, as higher earnings are partially offset by unfavorable timing in the engineering business. Recall that the first-half results are seasonally lower, we expect the second half to step up like prior years.

Available cash flow, which we define as operating cash flow less base CapEx, remains at healthy levels, enabling significant excess cash for secured growth and shareholder distributions, which can be seen in the pie chart. Year to date, we've deployed $6 billion of capital, split evenly between business investments and shareholder returns.

$1.9 billion of secured growth represents capital deployed for acquisitions and the project backlog. When considering the record $8.1 billion sale-of-gas backlog, continued roll-up acquisition targets, and project pipeline opportunities, we expect this number to remain a significant use of capital for the foreseeable future.

I'll wrap up with guidance on slide 6. Third-quarter guidance range is $4.45 to $4.55, or 6% to 8% growth.

This assumes no currency impact from prior year, but does assume a 1% FX headwind sequentially. Consistent with prior approach, the range assumes no economic improvement at the midpoint.

The updated full-year range is $17.70 to $17.90, or 8% to 9% growth, excluding a 1% FX tailwind assumption. This range raises the prior bottom end by 10 cents, but leaves the top unchanged.

While base volumes showed some recovery in the second quarter, we'd like a few more quarters under our belt before incorporating this trend into future guides. Therefore, we're leaving the back-half guidance assumption the same as before.

The Q2 to Q3 sequential EPS trend is projected to increase 5 cents at the midpoint when excluding FX, which reflects some of the actions being undertaken. Of course, this is merely a guide.

How we perform is what matters most. We know our owners expect more, and the organization is committed to delivering on those expectations.

I'll now turn the call over to Q&A. Thank you.

yes, good morning. Thank you.

Sanjiv, it seems you said it's all within the first 5 minutes. Can I dig a little bit deeper into that healthcare comment?

Can you give us a sense of how much of a headwind it has been over the last year? Is the business in the US currently profitable at all, or how much of a margin drag it has been on the business, please?

Thanks, Laurent. I think we in the slides itself, we've laid out the fact that the Americas business ex the US healthcare or Lincare business would be up 20 basis points on margin, ex pass-through, as we normally do.

That is a reflection of the gases business doing well. As we said in the remarks as well that there is a bit of a mix effect, which actually to be honest, I see the gases business doing well.

I will take the hardgoods, double-digit hardgoods sales that we are seeing in the business. It's a good signal of manufacturing recovery in the US.

Yes, it has a small dilutive impact on margin, and which is temporary. Then, of course, we talked briefly about sale of equipment elsewhere, particularly APAC, where there was that impact as well.

From our perspective, not happy with where the margins are. Actions are aggressively underway to essentially attack the issues that we've identified in that Lincare business.

I expect that we will continue to see sequential improvement as we move forward.

Thank you. Just as a follow-up, on the electronics side, I think the contracts that you announced have been, I guess, in the pipeline for a while.

I was wondering, in terms of geographies or maybe some of the key customers, where do you see the biggest opportunities on the electronics side? Is it still in the US or, elsewhere in Asia, maybe in Korea, Taiwan, et cetera?

Laurent, absolutely. The electronics pipeline, as I said in my remarks as well, is looking healthy at this point in time.

You certainly heard me say that I expect that we'll end this year on the backlog with a 8 handle, despite bringing on investments of up to $1.3 billion. The backlog will go down from the current sale-of-gas backlog of 8.1 by about 1.3, and we will add back into that backlog.

It has to be supported by a robust pipeline. Those projects span the world, to your point.

I see bulk of those projects out of the US, but see strong pipelines in Taiwan and Korea as well, and some in China.

Thank you.

Hi, good morning. Thanks for taking my question.

I guess just, talking about, some of the manufacturing growth assumptions, particularly in North America, it doesn't seem like you have some of this base volume assumption trend sort of baked into the outlook. Is the bulk of that inflection that you're seeing coming from commercial space?

I was hoping maybe you could dig into the health of some of the other end markets and, what you're sort of anticipating for the second half.

Sure. Why didn't I start off with a quick view?

I think I provided a broad overview in my prepared remarks, Patrick, there. Let me just kind of give you a sense of what we think the outlook for the second half looks like.

Traditionally, our resilient markets, healthcare and food and beverage, have been consistent. We continue to expect the same outlook for the rest of the year there.

Nothing significant to change. Electronics, as you saw year on year had 18% growth in second quarter.

We expect electronics momentum to carry on for the rest of the year as well. Again, pretty positive in terms of that.

Of course, adding to the backlog helps us get the future growth prospects locked in as well. A point on electronics worth noting, and I think in APAC in particular, the sale of equipment that we provide to many of our electronics customers is very important for us, because while, from a margin point of view, not that exciting, the reality is the pull-through on gas sales that happen in the future, I think this kind of ensures that.

Feel good about that as well as we look at the second half. On the industrial markets, and I'd say to you manufacturing, which you kind of specifically mentioned, looks robust.

Signals from the US market in particular where the recovery is most prominent looks good. The feedback from the customers suggest that they see that outlook for the rest of the year as things stand today.

Now, within that, the indicators that we look for, and I referenced this again in my remarks briefly, the sale in the US package business is a good leading indicator. Here, the gas side has been growing mid to high single digit, with the hardgoods themselves growing double digit.

I think that's where the confidence that the manufacturing recovery that we're expecting, or not just recovery, I think the momentum that we're expecting in manufacturing the US likely to continue. We see that also elsewhere.

Asia-Pacific saw manufacturing momentum pick up as well. Despite the fact that, there are some Middle East-related challenges in Asia in particular, but the manufacturing underlying seem to continue to perform well.

Again, the outlook for that continues to be reasonably robust. Aerospace did provide for more than a third of that growth for manufacturing.

To your point, I expect that momentum to carry on to the second half as well. Chemicals energy, has been a little bit spottier.

I think low single-digit growth. We've obviously had the benefit of some good backlog contributions coming in in Asia, I think that's looked good.

I do not see a fundamental shift in the chemicals energy piece. Obviously, there's a lot of volatility in the market at the moment.

There are lots of geopolitical events that could impact one way or the other. In part, you would see from our guidance that we've taken a neutral stand, in terms of what's going to happen to the economy.

We are happy for our investors to take a view on that because at this point, it's all speculation. Metals and mining, again, pretty robust in the US and in Brazil.

I expect that trend to be about steady. Obviously, in the US with all the build-out that's happening with data centers, etc., metals are getting a little bit of fillip, so that's good.

Listening to some of our customers' calls over the last few weeks, I've seen slightly more slightly higher degree of optimism as well on steel, it'll be good to see that flow through into the next half as well. I think that kind of broadly gives you a sense of where we're seeing momentum and what the outlook for second half looks like at this point.

Great. Thank you so much.

Good morning, fellas. Question just around the impact that you've seen on your business and on your customers from what's happening with the Strait of Hormuz and kind of the greater Persian Gulf area.

Obviously, particularly with helium, but then just with the general business. Then, if that issue reside or resolves itself this year, what do you think the impact will be a year out as that starts to normalize?

Duffy, the Middle East impact, as and I'll start with helium just to begin with, because I think that's a good place to give a sense of how we've managed and navigated that fairly complex set of issues. Then talk a little bit about what happens elsewhere.

Starting with helium. I think as far as helium is concerned, I'm really pleased with how our team has navigated this whole set of developments over the last many months, largely because we've done what we need to do in ensuring that reliable and safe supplies happen to our existing contracted customers.

We've had a lot of positive feedback coming from them, because that's what they would expect from Linde. More importantly, our teams have also gone out and they've signed up new customers with long-term contracts as well, leveraging the fact that we have a the confidence in our supply chain due to the diverse sources that we have supplying into the helium supply chain, the cavern that we maintain, and of course, quite importantly, the capability around supply chain logistics in terms of tanks, etc.

All of that's played well into positioning this for new business growth that we've seen. We have had, the pricing move along as well, which has been a good thing.

Obviously, with dislocation costs related to helium, the overall recovery probably doesn't quite show through in the margins just yet, but I fully expect that it will over the next couple of quarters. I think equally important just underscore on the helium piece is the fact that looking ahead, we continue to be confident in our ability to maintain that supply chain despite the more recent developments in the Strait of Hormuz.

Any change in the Strait of Hormuz and the fact that we restart helium production back in Qatar and get the alignment of all the supply chain elements that need to come together between tanks and shipping and so on and so forth, I think will have a lasting impact for the rest of the year. I don't think you will see normalization this year.

It will, once those issues are resolved, which of course itself remains a little bit of a question mark today, once the issues are resolved, we will see normalization progress, but it's at a small, a slower pace than most of us would like, and it'll kind of probably take us into the early part of next year. As things normalize, yes, next year we should see a more normalized helium market, but at this point in time, seeing the resolution of what happens in the Strait of Hormuz is probably more important than speculating what next year is going to look like.

Let me talk about some of the other markets. Where we have seen an impact of the Middle East crisis is the fact that in Asia, countries highly dependent on hydrocarbons coming out of the Middle East have had to scale back industrial activity.

I think, markets like India, some parts of ASEAN, Australia, and to a lesser extent China have seen that. I think that that's where the impact over this second quarter, as we've kind of mentioned to you, is probably a little bit more visible.

Everybody's hoping for a resolution. Once that happens, you will see that normalization happen fairly quickly.

Each of those countries has been looking at different strategies to manage these these issues that they're currently contending with.

Terrific. Thank you.

Hey, maybe just a two-part. One, first on helium, just to clarify.

Did you all change anything in your guidance assumptions relative to what you had assumed back at the start of the year? Then secondly, in Americas, the kind of year-on-year price step-down, I think it was flat sequentially, was that the hardgoods mix issue or is underlying sequential price level leveling off?

Thank you.

Hey, Vince. It's Matt.

I could probably answer those. I think first on helium, yeah, we left that guidance intact.

By default, that kind of means no material change, and helium would also be part of that. To your first point, we didn't change it.

Just kind of building off what Sanjiv said, when you think about the helium business right now, what we're seeing, we are seeing strong price improvement, but we're also seeing higher costs for dislocation, as Sanjiv mentioned. The contribution on dollar basis, it is positive.

It's not as large as we'd like it, but it's positive. On a margin basis, that grossing-up effect right now is a little bit dilutive.

That should stabilize. It normally does.

As you can imagine, right now meeting our customers and getting new contracts signed is the priority, and doing it at a positive dollar contribution is happening. It's just the margin gross-up effect right now is a little bit dilutive on that front.

On the Americas, just to make sure I understand. The price is up 2% year over year.

Sequentially we're flat. As when we talk about sequential, I tend not to spend a lot of time on sequential just given the different timings of some of the escalations that are done in the pricing actions.

Year over year always is a more important metric for me. When I think about that, it is I'd say for Americas delivering on our expectations.

Obviously, you're going to have, again, we talked about Lincare, there is not pricing in that business right now of significant amount. It is probably not keeping up with what it needs to be.

That will be a little bit of a drag. That's been the case, though, for many years now.

I would say pricing in Americas on the year over year is tracking where we'd expect and what we want to see. Hopefully, that answers your question, but just to make sure, I don't know if you have a follow-up on that.

Nope, all good. Thank you.

Yep.

Yep.

Thank you. Good morning.

Sanjiv, I know it's early, but if you look at next year 2027, given project startups, helium maybe being a tailwind next year, helium, growth in space, pricing, productivity, do you need much or any macro improvement to get to double-digit 10% EPS growth next year? Thank you.

Thanks, David. As our EPS algorithm lays out the fact that between management actions and capital allocation combined, we should be delivering 8% to 12%.

We're not looking for macro. As long as macro is not taking away from that, you should expect us to look at that 8% to 12% range.

I think we will be consistent on that as we look ahead to next year as well. Obviously, any tailwinds that we get will be factored straight in and you will see that improvement come through at the EPS line.

Now, as this is very early to talk about 2027, later in the year we'll have and early next year is when our guidance will be more clearer on that. Later in the year, we'll obviously be doing a lot of work planning for next year to make sure that we have a good handle on how the business is going to play out.

To be clear, helium should be a headwind next should be a tailwind next year. Is that fair?

Helium will be normalized next year. I think we'll have to wait and see what that means.

The complexity of volume and price mix, I think, will play a role in what helium does next year.

Thank you.

Hi. Good morning.

I wanted to ask on the CapEx raise for this year. I think you addressed it in the prepared remarks briefly, but did you indicate that a lot of that increase was linked with commercial space?

I guess if you can give maybe any other breakdown of that $500 million increase, that would be helpful. I'm just curious with that, if you are building more for that market through your merchant pipeline, what does that mean for space customers' approach, in your view, to make versus buy in terms of oxygen, nitrogen, and the gases for that market?

Thanks.

Hey, Josh, it's Matt. I could probably handle those.

Starting on the CapEx, yes, you are correct. The CapEx number on the estimate was bumped up.

Clearly with backlog wins, that will drive that. By adding the new project that Sanjiv mentioned in the prepared remarks, that is contributing to that.

Yes, there are going to be more commercial space activities in the base CapEx. That also are contributing to that as well.

The combination of those two, both project backlog and some of the base CapEx, will drive that. As far as the make versus buy, that when you think about our traditional on-site customers, that always is something that has been something we've managed for many, many decades, right?

A traditional on-site customer would look to buy a plant versus outsource in a sale-of-gas model, and that's something we had always managed through usually a hybrid approach because we had the capability to do both. I would say with commercial space, given the quantities of propellant they require, you're seeing a similar dynamic, at least with certain players that have comfort and the access to capital to have a desire to vertically integrate.

Now, this right now is primarily only with certain players in atmospherics. We are not seeing it in the hydrogen side, which is a very, very different dynamic for any hydrolox-based engines.

It's a normal occurrence, I'd say, when you start seeing these kind of quantities. It's something that's very akin to how we navigate the on-site business for many decades, and we're very comfortable with it.

Absolutely, I expect you'll see a blend of sale of gas and some sale of plant. Generally, those sale of plants can come with what's called an operate and maintain, you tend to run it all as a system.

You may run customer-owned plants with your own plants on sale of gas, and that gives the customer kind of the best of both, and it also helps manage our both capital and management of product. I would anticipate that for certain customers, not all customers, and it also would probably only be on certain atmospheric.

I don't anticipate it at this stage at hydrogen. That's how I see that develop.

The only thing I'd reiterate there, Matt, would be the fact that, we will play for both sale of, gas as well as sale of plant. We do participate in the opportunity even if it is a sale of plant, in case people want to go to be integrate them.

Okay. Thank you both.

Morning, everyone. Congratulations for getting the TSM, well, the large electronics customers over the line.

What can you share maybe some revenue intensity of the CapEx or give some guidance? Your European competitors kind of flagged a 25% CapEx-to-revenue conversion on some of these projects.

Is that a reasonable ballpark for you?

Hey, Matt. This is Matt.

The revenue to CapEx is always going to be a function of whether it's atmospheric or whether it's process gases like hydrogen. As you can imagine, if you have a more process hydrogen-based that has energy pass-through, that might be higher.

Traditionally for us, revenue has ranged anywhere from 20% to 50% depending upon energy pass-through or tolling. I would just say of the ones we've won, they're very, very similar to the structure and ones we've already had in place on the first few phases.

There's no real difference from that perspective, cuz those contracts follow a very similar construct on both the molecules and how energy is managed.

Thanks. If I could, the other business typically a bit all over the place, but was maybe not immaterial this quarter.

If my memory serves me right, that's where Linde AMT is and some of the sputtering targets and that stuff. Is that the semi-cycle build here, and this should be kind of like an indication of the direction of profits, or am I or is this kind of a little bit of a one-off positive quarter?

Hey, Matt, I'd say that the materials business overall has been doing well. Sitting within that are coating services, atomizers, and some sputtering, etc.

I think, all in, that portfolio is performing reasonably well under these conditions, driven by aerospace, a little bit of the commercial space build-out as well. I think if you put that together, I think it's looking the outlook, seems pretty robust for the second half as well.

Thanks very much. If I did the math correctly, the home care penalty was $30 million in the second quarter.

Order of magnitude, is it a $100 million penalty for this year? Is Lincare all of your 23% of healthcare revenues for the Americas?

Hey, Jeff. It's Matt.

I think the number's a little higher than what you have. Uh-huh.

You're close, but I'd say it's probably higher, though. You could probably say 30% higher than that number, give or take.

Okay.

That is the headwind we have. That's what we're facing.

I think when you think about the Americas, it is clearly the largest piece. Now, it does not include the institutional portion, which is actually run through our traditional gas business because of the nature of the contracts and the structure.

It is by far the lion's share of the Americas healthcare just given the size of the revenue of that business.

Okay. When we look at your healthcare revenues, they look pretty flat year over year.

Can you talk about the dynamic that's pressuring profitability? If you're have you come to a decision as to whether you want to divest this business, or is this going to be contemplated over the next quarter?

Does it take longer? Can you help us with those issues?

Sure, Jeff. Look, the challenges at Lincare are not new, right?

The business served us well through the COVID period and the immediate kind of couple of years after that. Over the last couple of years in particular, you've heard us reference it as well, it has faced persistent headwinds, right, from labor cost inflation and changes in reimbursement environments.

I think those have contributed to these penalties that you referenced earlier on. Now, we put a new management team in place.

Their focus is on improving the quality of that business. We've been pruning the portfolio.

Again, you've heard us say that in a couple of the calls over the last couple of years as well. There are aggressive actions currently in place to look at operational improvements and productivity.

Those actions will create the impact that we're looking for, which is why I expect, as we move forward, we will see improvements in that business. Now, in parallel to that aggressive set of actions that we've put in place, we're also evaluating what the strategic options for this business are.

I want to make sure that we do that exercise with diligence and determine one way or the other, this business is going to have a meaningful positive impact on our portfolio.

Great. Thank you.

All right. Thank you very much.

Just in terms of the backlog projects, can you give a little bit more indication of the margins of these projects? Are these just are these going to be some of the drivers of an uplift from this point in future years?

Thank you.

Thanks, James. As the backlog projects take typically between 2 to 3 years in terms of execution.

By the time they come on, we then typically expect a ramp-up to happen across the board. Now, the projects that we have in our backlog at the moment all met our investment criteria.

We tend to look at them from a pull stacks, double-digit IRR, unlevered IRR perspective. They hit the investment criteria and therefore are an attractive part of the future business growth that we're likely to see.

They do have a ramp that they go through before they actually hit their final margin contributions that they make. You should expect that cycle of backlog projects coming up, starting up, starting to deliver on margin contribution, and then through the ramp process ensuring that that moves up.

I always expect backlog projects to continue to improve on their margin till they reach their full capacity utilization.

Thanks.

Yes, thank you, and good morning. Sanjiv, if I look at your volume trend in Asia, it was up 6% for a second consecutive quarter, versus call it either side of flat throughout 2025.

Can you unpack that a little bit for us? My sense is you've had project startups there and maybe some sale of equipment.

Just trying to get a better sense of whether the baseline demand is improving in APAC.

Kevin, I think in part you've already answered your question. There are three components to what is happening in the Asia volumes, right?

There is obviously base volume, which is positive. There are sale of equipment, significant sale of equipment elements sitting within there for the electronics customers that has had a somewhat disproportionate impact in this last quarter that we're talking about.

Last but not least, there are some ramp-ups. I was just referencing to James earlier on how we expect projects to ramp up.

We're seeing a ramp-up of our backlog projects that were started up and are ramping up in ASEAN in particular, also contributing to that. You put those three together, I think you see that healthy 6% sitting over there.

Okay. Then wanted to ask maybe a general question on your backlog.

It seems that the electronics space in particular is quite vibrant and you're winning a fair amount of business there. Does that create a positive mix effect at all?

In other words, if you look at your returns, let's say over the last decade, are they any better in the electronics space relative to all of the other? Do smart combined or would you say that they're similar?

Hey, Kevin. It's Matt.

I can handle that. As you probably know, and as we said, we make our decisions on IRR, right?

That's how we make our backlog and our capital decisions. It's not really a revenue or a margin kind of view, more of an IRR, undiscounted or discounted unlevered view.

From that perspective, I would say all of our projects, whether it's in any end market, electronics, energy, they tend to all fall within a certain consistent range because it's based on the risk and the terms and the conditions of what we're undertaking. Of course, in electronics, you're going to have more purity requirements and you're going to have probably more redundancy, which generally means more capital.

Your return profiles tend to be consistent nonetheless. We don't really see much disparity in on-site returns by end market.

That tends not to happen. Where you can see different margin profiles is when you get the incremental process gases, rare gases, specialty gases that tend to come with large electronic clusters, because those are more specialized, require a lot more effort on purity and manufacturing.

That bolt-on on the aftereffect, it can create some incremental margin opportunities. The on-sites themselves are very similar across all end markets.

Again, IRR is what drives those decisions.

Very helpful. Thank you both.

Good morning. Thanks for taking my question.

Sanjiv, maybe can you speak to what you're seeing in particular out of APAC on the industrial side in terms of longer-term investment? I know you spoke to, right now there's kind of a mix of things going on just given what's going on in the strait and the Iran conflict, but is that having any slowdown effect or pausing effect on future projects, future, growth in the industrial markets looking out over say the next 2 to 3 years?

Or is it business as usual, and things are going to keep kind of coming on over time and adding to your growth as well?

John, I'd say the headline over there would be business as usual, reflected in a bit of a change in the mix. Particularly strong electronics growth, we talked about the backlog development.

We expect the project pipeline for electronics growth in Asia-Pac to remain fairly robust. I think that helps with some of that long-term investment profile that you're thinking about.

Where we do see a little bit of a mix effect is where the traditional end markets, for instance, I do not expect to see significant steel investments happen in China as an example. Now if you go back a decade, clearly that was the case, but going forward, that's unlikely to be the area where you see.

On the other hand, the flip side to that is in India, you're seeing traditional end-market investments happen, which results in us seeing an investment cycle as well over there. Those are in the more traditional end spaces like steel and refining and other elements of manufacturing as well.

I think I'd say to you, business as usual broadly, the mix is changing a little bit, getting more positively impacted by electronics, and then the rest being made up of the more traditional end markets.

Got it. Thanks very much for the color.

Thanks for taking my question. Apologies if this has already been asked, but if you could just elaborate a little bit more on some of the actions you're taking to drive a little bit of the margin recovery.

I know that you did have some of that within the Americas some compression. Then if you could look into maybe the back half or next year, do you expect that negative operating leverage to be resolved?

What would drive that? Is it increased management actions and pricing or productivity, or how do you see that?

Thanks.

Hey, Arun. It's Matt.

I think a couple things. First let's just talk about the comps in year over year.

If you may recall 2025, we had strong front-half margins, weaker back-half margins. When you think about the whole year in the context, I'm fully expecting us to see better year over year just given how last year played out.

That's just a bit of a comp scenario. As mentioned in the prepared remarks, and as we've stated, we have a series of actions underway that we need to undertake to improve margins.

Lincare's going to be the focus, given that's the biggest driver. I do think some of the other aspects, higher hardgoods sales and some of the sale of equipment, as Sanjiv mentioned, we view that as actually positive.

That's something we will continue to do. That will get us greater wallet share and greater connection to future gas sales.

Those are an integral part of our model, always have been and will continue to be. You do tend to see those grow stronger in certain recoveries and as markets start to expand.

We will likely look to take some cost actions this quarter, depending on the size. That's something we want to get ahead of.

It is clear you're seeing more inflation around the world, and that's something that we have to manage through our productivity and our actions. In some regions, you're seeing growth, which supports it.

In other regions, you're seeing inflation without the growth. That's an area we're going to focus on specifically for this quarter, above and beyond our normal productivity initiatives we normally take as part of our everyday DNA.

More to come on that. It's something we'll probably give a little more color on and what we've done in the October call.

I can tell you right now, these actions are already underway, and we're accumulating all them to get ahead of the next several quarters.

Thanks.

Hi there. Thanks for taking my question.

In the past, you've called out space being a billion-dollar opportunity. I'm just wondering if you have any update on that number.

Thanks.

Space sector, Abigail, continues to grow well. We consider that the and we talked briefly about some of the options around space earlier on in the call.

We are on track for that billion-dollar opportunity that we laid out over the next few years. I think 2030 was the timeline, billion-plus is what our expectation around the space markets was.

Once it reaches a certain size, you'll see us split that out in our end markets and have more visibility around that.

Got it. Thank you very much.

Abby, thank you. Thanks, everyone, for participating in today's call.

If you have any further questions, please feel free to reach out. Have a great day.