Financial Trends -- 7/10
Textbook high-quality industrial-gas compounder with genuinely improving trends. Revenue YoY
accelerating from flat to +8.2% (Q1'26) as base volumes inflect positive and FX turns to a tailwind.
Adjusted operating margin expanded ~110bps over eight quarters (~650bps over five years) on the
durable price-plus-productivity algorithm. Diluted share count grinding down ~2%/yr on consistent
buybacks. Held out of the 8-10 zone by cash-flow and balance-sheet items -- FCF is firmly positive
but only +0.8% YoY (capex ramp from ~$3B to ~$5B), and total debt has grown faster than revenue for
four straight quarters. One penalty modifier applied (-1, debt outpacing revenue).
Weight: 25%
Quarterly Revenue Trajectory ($M)
Clear revenue acceleration: +0.1% (Q1'25) to +8.2% (Q1'26).
Five consecutive quarters of accelerating YoY growth. The acceleration is partly FX (+5pts in Q1'26)
but underlying is real -- base volume turned positive (+1pt) for the first visible quarter after a
string of -1pt prints, and price/mix is a durable +2pts. Off the 2023 annual revenue trough (-1.5%),
the company is back on a +3.0% (2025) track.
Quarterly Operating Detail
| Metric | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 |
|---|---|---|---|---|---|---|---|---|
| Adj Op Margin % | 29.3 | 29.6 | 29.9 | 30.1 | 30.1 | 29.7 | 29.5 | 30.0 |
| Adj EBITDA ($M) | 3,206 | 3,253 | 3,244 | 3,213 | 3,351 | 3,377 | 3,410 | 3,449 |
| Adj EPS Growth YoY % | +8 | +9 | +11 | +5 | +6 | +7 | +6 | +10 |
| Free Cash Flow ($M) | 796 | 1,665 | 1,559 | 891 | 954 | 1,672 | 1,572 | 898 |
| Diluted Shares (M) | 483.2 | 480.9 | 478.9 | 476.3 | 473.6 | 471.5 | 468.7 | 466.3 |
| Total Debt ($M) | 21,518 | 22,262 | 21,623 | 23,897 | 25,920 | 25,925 | 26,989 | 26,317 |
Adjusted operating margin expanded ~110bps over eight quarters (28.9% to 30.0%).
The pricing-plus-productivity algorithm is intact -- consistent +2pt price/mix regardless of volume.
Adjusted EBITDA rose every quarter, adjusted EPS growth re-accelerated to +10% in Q1'26, and diluted
shares fell every single quarter. GAAP reported margin is noisier (Q4'25 dropped to 23.0% on a
cost-reduction charge) but the adjusted trend is unambiguously up.
Annual Financial Summary (FY ends December)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Total Sales ($M) | $30,793M | $33,364M | $32,854M | $33,005M | $33,986M |
| Rev YoY | — | +8.3% | -1.5% | +0.5% | +3.0% |
| Adj Op Margin % | 23.3 | 23.7 | 27.6 | 29.5 | 29.8 |
| Adj EBITDA ($M) | $10,179M | $10,873M | $12,133M | $12,819M | $13,351M |
| Reported Diluted EPS | $7.32 | $8.23 | $12.59 | $13.62 | $14.61 |
| Diluted Shares (M) | 521.9 | 504.0 | 492.3 | 482.1 | 472.2 |
Key trends
- Revenue re-accelerating off the 2023 trough: From $30.8B (2021) to $34.0B (2025), the -1.5% 2023 decline recovered to +3.0% (2025) and quarterly YoY is now +8.2% (Q1'26)
- Adj EPS compounding double-digit: Reported diluted EPS nearly doubled ($7.32 to $14.61) over five years; adjusted EPS growth re-accelerated to +10% YoY in Q1'26
- Margin expansion through-cycle: Adjusted operating margin expanded +650 bps over five years (23.3% to 29.8%)
- Share count declining: Diluted shares fell from 521.9M to 472.2M (-9.5% over 5 years), buyback-driven with no dilution
Segment Revenue ($M, Q1 YoY)
Free Cash Flow ($M, Annual)
FCF firmly positive but soft conversion. Annual FCF declined
2021 to 2024 ($6.6B to $4.9B) as capex ramped from ~$3.1B to ~$4.5B to fund the sale-of-gas and
electronics backlog, then recovered +3.3% to $5.1B in 2025. Operating cash flow is at a record
$10.4B. FCF is positive every quarter and every year and just inflecting higher, but it is NOT
accelerating -- the capex super-cycle is suppressing conversion. This is the reason the score does
not start at 10.
Penalty Modifiers
| Modifier | Detail | Penalty |
|---|---|---|
| Negative FCF | FCF solidly positive every period | N/A |
| Share Dilution >10% | Shares declining ~2%/yr; no dilution | N/A |
| Revenue Up, Op Income Down | Adj segment op profit rising every year ($9.7B to $10.1B) | N/A |
| Debt > Revenue Growth 3+ Qtrs | Total debt YoY +20.5% / +16.5% / +24.8% / +10.1% -- four straight quarters above revenue growth. Debt rose ~$14B to ~$27B (~+90%) over five years. Funds capex build and buybacks; coverage comfortable (ROC ~12%), but penalty is mechanical. | -1 |
The debt step-up is deliberate growth-and-return financing, not distress.
Total debt roughly doubled to ~$27B over five years to fund the capex super-cycle and $7B+ of annual
shareholder returns, financed on a fortress balance sheet at a ~3% average coupon with after-tax ROC
steady at ~12%. The rubric penalty (-1) is mechanical and applies, but it reflects growth investment
rather than balance-sheet deterioration.
Score Rationale
Score of 7/10. Base case maps near the high end: revenue YoY accelerating, adjusted margins expanding 100+bps, and share count declining -- three of the four "10" conditions met. The fourth (FCF YoY accelerating) is NOT met, so the starting point is ~8. Applying the mandatory -1 for debt growing faster than revenue for four consecutive quarters yields 7/10.
Supports the high base:
- Revenue re-accelerating to +8.2% YoY in Q1'26 as base volumes inflect positive and FX turns to a tailwind
- Adjusted operating margin expanding +110 bps over 8 quarters (+650 bps over five years) on the price-plus-productivity algorithm
- Adjusted EBITDA rising every quarter; adjusted EPS growth re-accelerated to +10% YoY
- Share count declining every single quarter, -2.1% YoY, buyback-driven, no dilution
What holds it out of the 8-10 zone (not operational):
- FCF firmly positive but only +0.8% YoY and decelerating -- the capex super-cycle ($3B to $5B) suppresses conversion
- Total debt growing faster than revenue for four straight quarters (-1 mandatory penalty), roughly doubling over five years to ~$27B
Data sourced from Daloopa (company_id: 467). Fiscal year ends December 31. All financials in USD.