Linde plc (NASDAQ:LIN)

Current Tax Expense

The current tax expense demonstrated a consistent upward trajectory over the five-year period. Starting at 1,215 million US dollars in 2020, it increased steadily each year, reaching 2,144 million US dollars by the end of 2024. The largest incremental rises occurred between 2020 to 2021 and 2023 to 2024, indicating an overall increase in taxable income or changes in tax rates impacting the current period liability.

Deferred Tax Benefit

The deferred tax benefit, presented as negative amounts, showed fluctuating behavior across the years. In 2020, the benefit was -368 million US dollars, which diminished to -254 million in 2021, indicating a reduction in deferred tax assets or increases in deferred tax liabilities. It then increased again to -383 million in 2022 but substantially decreased to -84 million in 2023, before slightly increasing to -142 million in 2024. This volatility suggests variability in timing differences affecting taxable income recognition or changes in tax planning strategies.

Provision for Income Taxes

The overall provision for income taxes exhibited a marked increase from 847 million US dollars in 2020 to 2,002 million in 2024. This provision combines the effects of current tax expense and deferred tax benefit, showing a growing tax burden over the period. The progression indicates an increasing profitability or tax base, with the significant rise in 2023 and 2024 reflecting higher income taxes likely driven by the rising current tax expense more than offsetting the fluctuating deferred tax benefits.

U.S. statutory income tax rate

The U.S. statutory income tax rate remained constant at 21% throughout the entire period from 2020 to 2024, indicating no changes in the federal tax policy impacting the company.

State and local taxes, net of federal benefit

State and local taxes, net of federal benefit, exhibited a fluctuating yet generally declining trend. The rate increased significantly from 0.6% in 2020 to a peak of 1.6% in 2021, followed by a gradual reduction to 1.5% in 2022, 1.3% in 2023, and further down to 1.2% in 2024.

Tax on Non-U.S. activities

This component showed a clear downward trend over the years. Starting at 4.9% in 2020, it decreased steadily to 4.3% in 2021, then dropped more sharply to 3.2% in 2022, 2.1% in 2023, and slightly increased to 2.2% in 2024. This suggests a reduction in the tax burden on foreign operations or a shift in geographic earnings composition.

Share-Based compensation

Share-based compensation, represented as a negative percentage impacting the effective tax rate, notably diminished in magnitude over time. Starting at -1.6% in 2020, the impact lessened to -1.1% in 2021, -0.7% in 2022, and then stabilized at -0.8% for both 2023 and 2024, indicating a reduced tax benefit or cost associated with share-based compensation expenses.

Russia charges

Russia charges appear as a discrete item only in 2021, accounting for 1.9%, and are absent in all other years. This suggests a one-time tax impact related to activities or events in Russia during 2021.

Other

The "Other" category showed negative contributions to the tax rate across most years with some variability. While negligible at 0.1% in 2020, it declined sharply to -1.1% in 2021 and remained relatively stable at -1.0% and -0.9% in 2022 and 2023 respectively, improving to -0.2% in 2024. This component appears to consistently reduce the effective tax rate albeit with diminishing effect in recent years.

Effective tax rate

The effective tax rate showed moderate fluctuations over the period. It started at 25% in 2020, slightly decreased to 24.7% in 2021, then increased to a peak of 25.9% in 2022 before declining more markedly to 22.7% in 2023. A slight upward adjustment to 23.4% was observed in 2024. Overall, the effective tax rate trend indicates variability influenced by multiple factors such as geographic tax exposures, discrete charges, and changes in tax categories.

Carryforwards

Carryforwards experienced a decline from 386 million USD in 2020 to 285 million USD in 2023, followed by a notable increase to 505 million USD in 2024, indicating a recovery or accumulation of tax attributes at the end of the period.

Benefit plans and related

This item showed a significant decrease over the period, starting at 814 million USD in 2020 and sharply dropping to 16 million USD by 2024, suggesting a major reduction in related deferred tax assets or changes in benefit plan obligations.

Inventory

Inventory generally trended upwards, starting at 70 million USD in 2020 and increasing steadily to 87 million USD in 2024, reflecting gradual growth in stock levels or valuation adjustments.

Accruals and other

Accruals and other related assets declined consistently from 1243 million USD in 2020 to 827 million USD in 2024, indicating a reduction in accrued liabilities or other related temporary differences over time.

Deferred tax assets, before valuation allowances

Deferred tax assets before valuation allowances decreased from 2513 million USD in 2020 to 1435 million USD in 2024, showing a continual downward trend in expected future tax benefits.

Valuation allowances

The valuation allowances fluctuated, beginning at -243 million USD in 2020, slightly decreasing and then reducing significantly to -146 million USD in 2024, which may suggest improved realizability expectations of deferred tax assets.

Deferred tax assets

Net deferred tax assets decreased from 2270 million USD in 2020 to 1289 million USD in 2024, in line with the reductions observed prior to valuation allowances, indicating an overall contraction in recognized deferred tax assets.

Fixed assets

Fixed assets showed a steady decrease in value from -3430 million USD in 2020 to -2378 million USD in 2024, reflecting disposals, depreciation, or impairment over the years.

Goodwill

Goodwill values declined slightly from -173 million USD in 2020 to -233 million USD in 2024, with a noticeable drop between 2022 and 2023, suggesting impairments or revaluations of acquired intangibles.

Other intangible assets

This category consistently decreased from -3703 million USD in 2020 to -2638 million USD in 2024, indicating amortization or write-downs of intangible assets over time.

Subsidiary/equity investments

Subsidiary and equity investments show a moderate decline from -609 million USD in 2020 to -535 million USD in 2024, with some fluctuation, possibly reflecting changes in investment valuations.

Other

The other category showed a declining trend until 2023, dropping from -791 million USD in 2020 to -456 million USD, but then increased again to -736 million USD in 2024, indicating volatility in miscellaneous deferred tax liabilities or assets.

Deferred tax liabilities

Deferred tax liabilities steadily decreased from -8706 million USD in 2020 to -6520 million USD in 2024, reflecting reductions in taxable temporary differences or reassessments of tax obligations.

Net deferred tax assets (liabilities)

The net position of deferred tax assets and liabilities moved from -6436 million USD in 2020 to -5231 million USD in 2024, representing a gradual improvement in the overall net deferred tax liability position.

Deferred tax assets (included in Other long-term assets)

The deferred tax assets exhibit a declining trend from 2020 through 2023, reducing from $268 million to $226 million. However, in 2024, there is a notable increase to $428 million, reversing the previous downward trend significantly.

Deferred tax liabilities (included in Deferred credits)

The deferred tax liabilities consistently decrease over the entire period from 2020 to 2024, falling from $6,704 million to $5,659 million. This decline is steady, with the largest reductions occurring in the earlier years and a more moderate decrease in the later years.

Overall observations

The data reveals a sustained decrease in deferred tax liabilities over the five-year period, which might indicate improved tax management or changes in the company's deferred tax positions. Conversely, deferred tax assets initially diminish but then sharply increase in the final year, suggesting a possible revaluation or recognition of previously unrecorded assets. The trends in these tax-related balances reflect shifts in the company's tax strategy or underlying temporary differences affecting these deferred amounts.

The analysis of the reported and deferred income tax adjusted financial data over the five-year period reveals several notable trends in the financial position and performance metrics.

Total Assets

Both reported and adjusted total assets show a general declining trend from 2020 through 2024. Reported total assets decreased from $88,229 million in 2020 to $80,147 million in 2024, representing an approximate decline of 9%. Adjusted total assets mirrored this pattern, declining from $87,961 million in 2020 to $79,719 million in 2024. The gradual asset base reduction suggests either asset disposals, depreciation exceeding new acquisitions, or other strategic asset management actions.

Total Liabilities

Reported total liabilities demonstrate a fluctuating yet upward trajectory, starting at $38,647 million in 2020 and rising to $40,659 million in 2024. Adjusted total liabilities follow a similar pattern, increasing from $31,943 million in 2020 to $35,000 million in 2024. The widening gap between reported and adjusted liabilities indicates the impact of deferred income tax adjustments, with adjusted liabilities consistently lower. The gradual increase in liabilities despite contracting assets could imply increased leverage or heightened financial obligations over time.

Shareholders’ Equity

Reported shareholders’ equity displays a continuous decline from $47,317 million in 2020 to $38,092 million in 2024, a decrease of approximately 20%. Adjusted shareholders’ equity also decreases over the period, though it remains materially higher than reported equity each year, moving from $53,753 million in 2020 to $43,323 million in 2024. The declining equity trend signals potential pressures on retained earnings or dividend distributions exceeding net income. The difference between reported and adjusted equity highlights the significant positive effect of deferred tax adjustments on net worth measurement.

Net Income

Reported net income shows consistent growth, rising from $2,501 million in 2020 to $6,565 million in 2024. Adjusted net income also follows this upward trend, increasing from $2,133 million to $6,423 million over the same period. The acceleration in net income, particularly notable from 2022 onwards, suggests improving operational profitability or one-time gains impacting earnings. The relatively close alignment of adjusted and reported net income in the later years may reflect a reduction in deferred tax impacts on earnings or improved accuracy in tax expense recognition.

Overall, the data suggest a company experiencing a shrinking asset base and declining equity, while simultaneously increasing liabilities and generating rising net income. The considerable difference between reported and adjusted figures, predominantly in equity and liabilities, underscores the significance of deferred income tax effects on the financial statements. The improving net income indicates favorable operational performance despite the contraction in the balance sheet size.

The financial data shows several notable trends in profitability, asset efficiency, leverage, and returns over the five-year period from 2020 to 2024.

Profitability Margins

Both reported and adjusted net profit margins exhibit a clear upward trend. The reported net profit margin increased from 9.18% in 2020 to 19.89% in 2024, indicating improved profitability on revenues. Adjusted net profit margins show a similar pattern, rising from 7.83% to 19.46% in the same period, reflecting enhanced core earnings after removing the effects of income tax adjustments. The consistent growth implies strengthened operational efficiency and cost control.

Asset Turnover

Reported and adjusted total asset turnover ratios both increased from 0.31 in 2020 to a peak of 0.42 in 2022 before slightly declining and stabilizing at 0.41 through 2023 and 2024. This indicates an improvement in the company’s ability to generate sales from its asset base, although the slight dip after 2022 suggests some leveling in asset utilization efficiency.

Financial Leverage

Financial leverage ratios, both reported and adjusted, display a gradual increase over the period. Reported financial leverage rose from 1.86 to 2.10, while adjusted leverage increased from 1.64 to 1.84. The rising leverage suggests higher reliance on debt financing or other liabilities to fund assets, which could enhance returns but also introduces additional financial risk.

Return on Equity (ROE)

Reported ROE shows a substantial increase from 5.29% in 2020 to 17.23% in 2024, with adjusted ROE following a similar pattern, increasing from 3.97% to 14.83%. The rising equity returns are consistent with improvements in profit margins, moderate asset turnover expansion, and increased leverage, all contributing to higher shareholder value generation.

Return on Assets (ROA)

ROA, both reported and adjusted, also increased steadily from 2.83% to 8.19% and 2.42% to 8.06%, respectively. This trend signals better overall efficiency in using assets to generate earnings, aligned with the enhanced profit margins and asset turnover ratios observed.

In summary, the company demonstrates strong and consistent improvement in profitability, asset efficiency, leverage, and returns over the five-year horizon. While financial leverage is rising, which may increase financial risk, the company’s enhanced profitability and returns suggest effective management of these factors. The adjusted figures confirm these trends hold even after accounting for income tax impacts, underscoring the underlying operational strength.

Net Income Trends

Reported net income showed a consistent upward trajectory from 2020 to 2024, increasing from $2,501 million in 2020 to $6,565 million in 2024. This represents more than a two-and-a-half-fold increase over the five-year period. Adjusted net income followed a similar pattern, rising from $2,133 million in 2020 to $6,423 million in 2024, indicating sustained underlying profitability growth after adjusting for reported and deferred income tax effects.

Profit Margin Analysis

Both reported and adjusted net profit margins improved substantially over the period. Reported net profit margin increased from 9.18% in 2020 to 19.89% in 2024, more than doubling within five years. Adjusted net profit margin also rose significantly from 7.83% to 19.46% during the same timeframe. This improvement suggests enhanced operational efficiency or favorable revenue mix contributing to better profitability.

Comparison Between Reported and Adjusted Figures

The gap between reported and adjusted figures remained relatively stable but narrowed slightly over time. Reported net income consistently exceeded adjusted net income by several hundred million dollars, while reported net profit margin was slightly higher than adjusted margin. This indicates that deferred and other income tax adjustments had a positive, yet diminishing, impact on reported profits, reflecting possibly optimized tax strategies or accounting treatments becoming more aligned with economic performance.

Overall Assessment

The data reflects a strong positive performance trend with steady growth in both absolute net income and profitability ratios. The progress is evident in both raw reported data and figures adjusted for income tax considerations, underscoring resilient earnings quality. The upward slope in margins indicates consistent margin improvement likely driven by operational gains or favorable market conditions, supporting a positive outlook on financial health and efficiency.

Total Assets

The reported total assets show a declining trend from 88,229 million US dollars at the end of 2020 to 80,147 million US dollars by the end of 2024. This represents an overall decrease of approximately 9.2% over the five-year period. Similarly, the adjusted total assets follow the same downward pattern, decreasing from 87,961 million US dollars in 2020 to 79,719 million US dollars in 2024, indicating a slightly larger relative reduction compared to reported assets.

Total Asset Turnover

The reported total asset turnover ratio demonstrates a positive growth trend from 0.31 in 2020 to 0.42 in 2022, followed by stabilization around 0.41 in 2023 and 2024. This suggests an improvement in the efficiency with which assets generate revenue, peaking in 2022 and maintaining consistency thereafter. Adjusted total asset turnover mirrors this trend precisely, reflecting the similar treatment of income taxes in both calculations and confirming the robustness of operational efficiency improvements irrespective of tax adjustments.

Overall Insights

The data reflects a contraction in asset base alongside improved and then stable asset utilization efficiency. Despite the reduction in asset values over time, the company has managed to enhance its revenue generation per unit of asset up to 2022, maintaining that level subsequently. The alignment between reported and adjusted figures indicates that tax adjustments have minimal impact on asset valuation and turnover ratios, reinforcing the reliability of these performance indicators for internal analysis.

Total Assets

The reported total assets demonstrate a declining trend from 88,229 million US dollars at the end of 2020 to 80,147 million US dollars by the end of 2024. Adjusted total assets, which account for deferred income tax effects, mirror this downward trajectory, decreasing from 87,961 million US dollars in 2020 to 79,719 million US dollars in 2024. This gradual reduction indicates a contraction in asset base over the five-year period.

Shareholders’ Equity

Reported shareholders’ equity exhibits a consistent decline from 47,317 million US dollars in 2020 to 38,092 million US dollars in 2024. The adjusted shareholders’ equity figures, which include tax adjustments, also follow this decreasing pattern but start at a higher base of 53,753 million US dollars in 2020, reducing to 43,323 million US dollars in 2024. The adjusted equity remains significantly above reported equity levels throughout the period, suggesting material deferred tax impacts on equity valuation.

Financial Leverage Ratios

Reported financial leverage, measured as a ratio, shows a gradual increase from 1.86 in 2020 to 2.10 in 2024, indicating a rising use of debt relative to equity. Similarly, adjusted financial leverage ratios, which consider adjustments to equity, increase from 1.64 to 1.84 over the same timeframe. Both measures reflect a strengthening leverage position, with adjusted figures consistently lower, implying that tax adjustments reduce the apparent leverage slightly but the overall trend remains upward.

Overall Insights

Over the analyzed period, the company’s asset base and equity have steadily declined, which may signal operational contraction, asset disposals, or valuation adjustments. Concurrently, the increasing financial leverage ratios point toward greater reliance on debt financing relative to equity. The difference between reported and adjusted figures highlights the significance of deferred income tax considerations in assessing the company’s financial position. The consistent pattern across metrics suggests cautious financial management to balance shrinking equity with controlled leverage growth.

Net Income Trends

The reported net income of the company shows a consistent upward trend over the five-year period, increasing from $2,501 million in 2020 to $6,565 million in 2024. Similarly, the adjusted net income also rises steadily from $2,133 million to $6,423 million during the same timeframe, with a slight gap between reported and adjusted figures indicating the impact of tax adjustments.

Shareholders’ Equity Trends

Reported total shareholders’ equity exhibits a declining pattern, decreasing from $47,317 million in 2020 to $38,092 million in 2024. Adjusted total shareholders’ equity follows a similar downward trajectory, falling from $53,753 million to $43,323 million over the period. This reduction suggests a potential return of capital to shareholders or other equity-reducing events despite growing net income.

Return on Equity (ROE) Trends

Both reported and adjusted ROE show significant improvement across the years. Reported ROE increases from 5.29% in 2020 to 17.23% in 2024, while adjusted ROE rises from 3.97% to 14.83% over the same period. The growth in ROE reflects enhanced profitability relative to shareholders’ equity, driven by rising net income in the context of declining equity balances.

Insights and Summary

The data reveals robust growth in profitability as evidenced by increasing net income and improving ROE metrics. The divergence between reported and adjusted figures highlights the effects of income tax and other adjustments but does not alter the positive trend. Conversely, the decreasing shareholders’ equity base amid rising earnings points to strategic financial management decisions, possibly including dividend distributions, share repurchases, or other factors reducing equity. Overall, the company demonstrates improved efficiency in generating returns for shareholders despite a shrinking equity base.

The financial data displays a consistent upward trend in both reported and adjusted net income over the five-year period. Reported net income grows from US$2,501 million in 2020 to US$6,565 million in 2024, while adjusted net income similarly rises from US$2,133 million to US$6,423 million in the corresponding years. This indicates solid profitability improvements irrespective of income tax adjustments.

Total assets, both reported and adjusted, exhibit a slight downward movement overall. Reported total assets decrease from US$88,229 million in 2020 to US$80,147 million in 2024 with minor fluctuations visible around 2022 and 2023. Adjusted total assets follow a comparable pattern, declining from US$87,961 million to US$79,719 million over the period. This suggests a modest contraction or optimization in the asset base over time.

Return on assets (ROA), measured as a percentage, shows a significant positive trend, enhancing the indication of improved operational efficiency and profitability. Reported ROA rises from 2.83% in 2020 to 8.19% in 2024, while adjusted ROA moves from 2.42% to 8.06%. The slight difference between reported and adjusted ROA values suggests that deferred income tax adjustments have a relatively minor impact on this ratio but the overall trend remains consistent.

In summary, the data points to a period of strong and sustained growth in profitability with rising net income and improving returns on assets. This growth occurs alongside a gradual reduction in total asset holdings, implying more efficient use of assets to generate earnings. The alignment between reported and adjusted figures affirms the robustness of these trends beyond tax-related accounting adjustments.

Net Income

Strong annual growth in both reported and adjusted figures from 2020 to 2024, increasing approximately 2.6 times.

Total Assets

Slight declining trend in both reported and adjusted total assets with around a 9% decrease over the five years.

Return on Assets (ROA)

Consistent improvement in profitability ratios, more than doubling the ROA percentage, with minor differences between reported and adjusted values.