Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Linde, a global industrial gas company serving diverse industries and also designing and building gas production equipment, reported stable revenue compared to the same quarter last year and slightly lower than the prior quarter. Free cash flow margin weakened from both comparison periods as capital expenditure increased while operating cash flow improved only modestly.
- Operating cash flow improved relative to revenue, but a higher proportion of that cash was used for capital expenditure, reducing the conversion into free cash flow. Consequently, the free cash flow margin declined.
- Compared to the prior quarter, revenue was slightly lower and operating cash flow was higher, but capital expenditure rose more substantially, resulting in lower free cash flow and free cash flow margin. Versus the same quarter one year earlier, revenue and free cash flow were stable, while operating cash flow improved and capital expenditure was higher, leading to a slightly lower free cash flow margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$4.9B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.6B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.8B
Cash generated by operations before capital spending.
CapEx
$1.3B
Capital spending and related asset purchases.
FCF margin
18.8%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2024-03-31 | $8.1B | $2.0B | $1.0B | $906.0M | 11.2% |
| 2024-06-30 | $8.3B | $1.9B | $1.1B | $796.0M | 9.6% |
| 2024-09-30 | $8.4B | $2.7B | $1.1B | $1.7B | 19.9% |
| 2024-12-31 | $8.3B | $2.8B | $1.3B | $1.6B | 18.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 90.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 15.1% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$12.6B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Capital Expenditure Increase
Capital expenditure rose compared to both the prior quarter and the same quarter last year, while operating cash flow increased only modestly. This shift consumed a larger share of operating cash flow, reducing free cash flow margin.
Higher capital spending constrained free cash flow conversion compared to the prior quarter and the year-ago period.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow improved relative to revenue, but a higher proportion of that cash was used for capital expenditure, reducing the conversion into free cash flow. Consequently, the free cash flow margin declined.
Compared to the prior quarter, revenue was slightly lower and operating cash flow was higher, but capital expenditure rose more substantially, resulting in lower free cash flow and free cash flow margin. Versus the same quarter one year earlier, revenue and free cash flow were stable, while operating cash flow improved and capital expenditure was higher, leading to a slightly lower free cash flow margin.
Monitor the trend in capital expenditure relative to operating cash flow, as the increased spending this quarter reduced free cash flow margin.