B (18:37)
Ever wanted to explore the world of online trading but haven't dared try? The futures market is more active now than ever before, and Plus500Futures is the perfect place to start. Plus500 gives you access to a wide range of instruments, the S&P 500, NASDAQ, Bitcoin, gas and much more. Explore equity indices, energy metals, forex, crypto and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone, deposit with a minimum of $100 and experience the fast accessible futures trading you've been waiting for. See a trading opportunity and you'll be able to trade it in just two clicks once your account is open. Not sure if you're ready? Not a problem. Plus500 gives you an unlimited risk free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus500 is your gateway to the markets. Visit Plus500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500 it's trading with a plus if you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work. Today, NetSuite is the number one AI Cloud ERP trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights and help you cut costs while making fast AI powered decisions with confidence. And now with the NetSuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add on it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, NetSuite helps you stay ahead if your revenues are at least in the seven figures. Get their free business guide Demystifying AI at netsuite.com study the guide is free to you at netsuite.com study netsuite.com study all right, back to the show. So after analyzing retiree spending habits, it's clear that most people do not aim to die with zero. And there are a couple of reasons as to why that is. The first is that we're saving all this money until we retire at say, the age of 65, only to not have the energy in our 70s and 80s that we had in our earlier years. For example, no matter how much money you have, if you don't have the drive and the energy to travel in your 70s or it becomes a major headache to travel, you know you're just not going to enjoy that money like you would have earlier in your life. Perkins saw this in his grandmother who was in her late 70s. When he was in his late 20s, on the up and up in Wall street, he wanted to share the wealth he had with those closest to him. So he gave his grandmother a $10,000 check, which he now realizes was actually a big mistake, as she wasn't really spending any of the money that she had. It's not that she was poor or that she needed the cash to pay bills. It's just that her go go years were largely over. There's another story from the book about his grandmother that illustrates how some people can indefinitely delay gratification. You know, largely for no reason. She would keep her couch, loveseat, and easy chair covered in plastic to protect it from general wear and tear. But this plastic also made the furniture uncomfortable to sit on and unattractive. For one special occasion, she had taken the plastic off. And Perkins, you know, he loved the furniture, but other than that, that plastic would always be on the furniture, and it would stay on for the rest of her life. I think the takeaway from this is, why have a nice couch and a nice loveseat if you're not going to actually enjoy it? There are certainly times in your life to be thrifty and delay gratification, and there are times in your life to actually spend your money and enjoy the fruits of your labor. Some people get stuck in either one mode or the other for much of their life and have trouble flipping that switch when it makes a lot of sense to do so. The other reason that people have a hard time spending their money in their older years is to be prepared for unforeseen expenses in their older ages, especially medical expenses. Medical expenses are, of course, difficult to predict, but that's exactly what health insurance is for. It helps protect against large, unforeseen medical expenses. However, insurers are not always going to foot the bill if for some reason they decide to deny coverage. So given this uncertainty of their spending needs in the future, many retirees still play it on the very safe side. Given that Perkins mantra outlined in the book is to maximize the amount of enjoyment that we get out of life, then saving all of this money to never get to enjoy it, you know, just doesn't seem ideal. So the question then becomes, how do we go about spending our money? Perkins recognizes that with declining health, it'll naturally lead to diminishing interest in things that you could theoretically spend your money on. So he's in the camp that you should expect to spend much less in your 80s than you would in your 50s. One of my favorite chapters from the book is chapter five, titled what about the Kids? Every time Perkins talks about dying with zero, he typically will get some version of the question, what about the kids? Meaning why would you want to pass away without having anything left to give your children? Which logically makes sense to ask. It feels a bit selfish if one makes all this money throughout their life only to pass away and leave their kids without any sort of gift or inheritance. Perkins, who has two children himself, he recommends giving to your children earlier in life rather than just when you pass away. Federal Reserve data shows that the typical inheritance is passed down to children around the age of 60. That's a natural result, as the most common lifespan is 80 and the most common age gap between parents and children is around 20 years. And most of the money that children end up receiving from their parents ends up being through an inheritance instead of through a gift earlier in their life. The utility and value of money changes as we age and accumulate wealth. So a monetary gift at the age of 30 is actually much more meaningful than at age 60. Because when we're younger, you're at the stage of your life where you're getting your footing, you're buying a house and ensuring that you live in a good neighborhood, you know, and starting a family. Likewise, when you're 60, your kids have moved out, you may have paid off your house by then, your retirement assets have potentially grown to a level where you're very comfortable and getting an extra gift from your parents might make little to no difference in your life. Through this lens, one could argue that a $25,000 gift at age 30 is more valuable or makes more of an impact than a $250,000 gift at age 60. Furthermore, a 30 year old can also arguably enjoy the money more than a 60 year old can. As one ages, the utility of money declines considerably. Either you would get a lot less enjoyment out of that same dollar, or you would need more money to obtain the same amount of enjoyment as you would when you're younger. As a result, Perkins reasons that as your adult children age, every dollar you give them goes less far over time, and at some point that money might become almost useless to them. To use an extreme example to help illustrate the value of passing down wealth earlier, which do you think appreciates the gift more? A 21 year old that has $0 to his name and receives $10,000 or a 61 year old that has $5 million to his name and receives $100,000? I think the clear answer is the former. If you're trying to maximize the impact of the money you give instead of just the total dollar amount, then it's important to also recognize that timing matters. Of course, this does not apply to everybody, but I think you follow the point he's making here. The other issue with passing down wealth when you die is that you're probably assuming that all of your children will outlive you, which oftentimes is not the case. Around 17% of Americans pass away prior to age 60, and around 30% of Americans pass away prior to Age 70. I've been fortunate that both my grandmothers are around at 90 years old and they've both seen one of their children unfortunately pass away prior to themselves being born and raised here in Nebraska. One of the things that I appreciate about the culture here is how family oriented it is. So when I read about Perkins lens of maximizing your life experiences and closely considering the timing of life experiences, I think one of the things that a lot of people around me get right is taking their families on vacations. So growing up, I would go boating at the Lake of the Ozarks each summer and we still have that tradition to this day. Is it the cheapest trip? Absolutely not. But it's also about having those experiences together as a family because one day mom and dad will not have the energy to drive to the lake and those memories will carry with their children and their grandchildren for a lifetime. Now, today my parents are in their 60s, so now they get to share those experiences with their grandchildren, which are my three nephews. These types of investments pay dividends that may not be as obvious on the surface. Researchers have found that young adults who as young children received more affection from their parents, come to enjoy better personal relationships, experience better health outcomes, and also have lower rates of substance abuse and depression. Perkins overall thinking on spending money, it sort of goes against what I feel myself and probably how many people in our audience feel. We're often told to start saving money early in life, to take full advantage of the benefits of compounding, and to not fall prey to the hedonic treadmill. Which explains for as one incomes rise, their spending tends to rise in tandem. Well, this is exactly what Perkins believes is the right thing to do. But I think we generally all still view spending money in a similar light. We need to strike that balance between spending on the present, on things you value and and saving intelligently for the future. If we think of making the most of life as simply maximizing our life experiences, then traveling is one thing that many people would like to take advantage of. But traveling has its difficulties as it requires time, money and health. When you're old, your health is in decline, and when you're young, you might not have the time and or the money. This is why Perkins encourages readers to travel as soon as they can, preferably in their early 20s. Even if you don't have a lot of money, you should travel because it's the one time in your life where you have the time and the health. By the time you're in your 30s, you might have kids. Then you likely won't have the opportunities to travel abroad for an extended period of time. A similar line of thinking can be applied to sports. If you enjoy playing sports, you should do so when you're young because the older you get, the more difficult it is to play sports and the harder it is to enjoy. In my spare time, I enjoy lifting weights, playing basketball, playing pickleball, all of which are activities I thoroughly enjoy and they help keep me in shape. I also play golf from time to time, but it depends on the day whether I truly enjoy it or not. Furthermore, the rate at which you decline physically is partially up to you. The better you maintain your health, the less steep your decline is expected to be. Nothing has a greater effect on your ability to enjoy experiences at any age than your health. I think some people are fed the narrative of looking forward to retirement because of all the free time you're going to have. You know you're going to be able to enjoy the money you've saved up all those years. But the real golden years of enjoying the fruits of your labor come before the traditional retirement age of 65. So it's all about finding the right balance between time, money, and your health. At different points in your life, each of those is going to look different. When one is middle aged, say, in their 40s, still in good health, and is in a great financial position, the biggest constraint is likely having time. So this is a period of your life where it can make sense to exchange your money for more time when that allows. That might mean hiring out tasks that take up your free time, like house cleaning, yard work, home maintenance and repairs, or even cooking or grocery shopping. Sometimes it's easy for me personally to outsource some of these things, but there's still those tasks that are just difficult to outsource to somebody else. Something like house cleaning is something I just don't really hesitate to outsource, as that time can either be used to earn more money or just do something that I enjoy. In chapter seven, Perkins discusses time bucketing your life When Perkins daughters were little, he would often watch kids movies with them. But then one day, his younger daughter was 10, and she just wasn't as interested in watching movies anymore. All of a sudden, she was too old for it. If someone had told him that at this specific date, at this specific time, his kid would stop wanting to do this activity with him, then he would probably have done it more and made the most of it. But unfortunately, in real life, we do not receive this luxury. We sort of assume that some things will last forever, but of course they don't. But recognizing that they don't last forever, that everything fades and dies, can make you appreciate everything more in the here and now. Die with zero is predicated on the hard, cold truth that we all die, and as we age, our health will gradually decline. But there's another, less obvious truth about dying that has important implications for how you should live your life. We all die a multitude of deaths throughout our lives. There will also be a last time that Perkins goes waverunning, a last time playing in a poker tournament, and a last time to board a plane to fly somewhere exotic. It's kind of sad to think that eventually the teenager in you dies, the college student in you dies, the parent of young children in you dies, etc. Once each of these many deaths occur, there's no going back. Maybe quote dies is a bit harsh in this context, but you get the idea. We all keep progressing from one stage of life to the next. The die with zero philosophy recognizes this fact and seeks to make the most of each window of opportunity before it closes forever. Perkins discusses the work of Bronnie Ware, who had conversations with patients on their deathbed about the lives they had lived and the regrets they had. There were five common regrets they shared among them. The first was wishing they'd had the courage to live a life true to themselves and as opposed to the life that others expected of them. It's a regret about not pursuing your dreams and therefore having those dreams unfulfilled. If you ignore what you truly value in life and instead pursue a path that society pushes on you, you risk having real regret at the end of your life. In our American culture, society can push values such as hard work and earning more money and de emphasize things like leisure, adventure, and quality relationships. The second regret, which was actually the top regret for male patients, was, I wish I hadn't worked so hard. Now, that's not to say that you should immediately start working less, but instead recognize that our time here is limited and we should try to make the most of what we're given. To help do this, Perkins introduces the concept of time buckets. Time buckets are a simple tool for discovering what you want your life to look like. In broad strokes, you simply map out the rest of your life in 5 to 10 year increments for each bucket, and then consider the key experiences, activities or events that you definitely want to happen during that period of your life. If experiences are some of the best parts of your life, then it's probably good to actually write down some of those experiences that we'd like to have in our lifetime. Some examples can include having a child, running a marathon, hiking the Himalayas, building a house, starting a business, go skiing a certain number of times, and so on. This can help us actually consider some of the really important things that we want to do in our lives. For example, I'd like to spend a couple of weeks in Europe, but I haven't been able to find the time to actually do it. It's easy to live our lives as if we'll be able to make time later, but then life only gets busier and it becomes even more difficult to make that trip. Mapping out your life in some fashion can help us be more intentional with the things we would like to do throughout the different stages of our lives. In the book, Perkins gave readers an impossible task. To die was zero, but the real aim was to ensure that we live a life intentionally instead of on autopilot, and maximize the use of our wealth to live our best lives possible. That's why dying with zero, at least to Perkins, is a worthy goal. As someone who's a natural saver and oftentimes enjoys delaying gratification, this book really got me thinking a bit differently about how to approach saving and spending my money in living out my life. So during my last episode, which was published a couple of weeks ago, I discussed the drawdown in Constellation software, which primarily occurred due to AI fears. This made me consider what type of company might have near zero risk from AI. Specifically, software companies are going to be some of the first targets for disruption. But what companies have practically no chance of being disrupted by new technologies like AI. One of the first companies that came to mind for me was a company that a member of our Mastermind community pitched to the group. That company is Lindy plc. So I'd like to give our listeners a bit of an overview of the company and some of the things that I learned from that presentation. Our member, who's an equity analyst at a multibillion dollar wealth management firm, he posed the question to the group, if you had to invest all of your net worth in one company over the next 10 years and you cannot sell it, what would you own? For him, the clear answer was Lindy plc. Before getting to Lindy specifically, when we think about what type of company we would want to put our entire net worth in for 10 years, the company probably needs a few characteristics, at least in my mind. So the first would be I would need to be highly certain of the future state of that business. Second, I would need to be highly certain that the future state of that business will be positive. So it would need to be able to grow earnings at an adequate rate in essentially any market environment. And finally, third, the company needs to be trading at a reasonable starting valuation. So let's see exactly how Lindy may or may not fit into that framework. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why Vanta is a game changer. Vanta automates your compliance process and brings compliance, risk and customer trust together on one AI powered platform. So whether you're prepping for a SoC2 or running an enterprise GRC program, Vanta keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, Vanta gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and RYTR spend 82% less time on audits with Vanta. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started@vanta.com billionaires that's vanta.com billionaires when I started my own side business, it suddenly felt like I had to become 10 different people overnight, wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters for millions of businesses. That tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e commerce in the US. From brands just getting started to household names, it gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready to use templates, and Shopify is packed with helpful AI tools that write product descriptions and even enhance your product photography. Plus if you ever get stuck, they've got award winning 24. 7 Customer support Start your business today with the industry's best business partner, Shopify and start hearing. Sign up for your $1 per month trial today at shopify.com WSB go to shopify.com WSB that's shopify.com WSB billion dollar investors don't typically park their cash in high yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, Private credit. Now the same passive income strategy is available to investors of all sizes thanks to the Fundrise Income Fund, which has more than $600 million invested and a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com WSB to invest in the Fundrise Income Fund in just minutes. The fund's total return in 2025 was 8% and the average annual total return since inception is 7.8%. Past performance does not guarantee future results. Current distribution rate as of 12312025 carefully consider the investment material before investing, including objectives, risks, charges and expenses. This and other information can be found in the Income Funds prospectus@fundrise.com Income this is a paid advertisement. All right, back to the show. Lindy is the largest global provider of industrial gases with $34 billion in revenue and $220 billion in market cap. When I say industrial gases, think of things like oxygen, nitrogen, hydrogen, carbon dioxide, et cetera. The company also designs and builds equipment that produces industrial gases and offers customers a wide range of gas production and processing services. Linde is a global business as they have around 65% of sales outside of the US. The business was started in 1879, so there's a very long history here and the company merged with Praxair in 2018, which is an American industrial gases company. Lindy is domiciled in the uk, but with the merger of Praxair, you can really think of this as an American company. Since their corporate headquarters is in Connecticut. Over the past few decades, the business has performed very well from a financial standpoint. For the 30 years or so leading up to 2024, sales have compounded at 9% and earnings per share has compounded at 12%. The industrial gas segment has 30% EBIT margins and overall return on invested capital is over 20%. After backing out Goodwill and Intangibles from 1993 to year end 2024, Lindy's stock has compounded at 12% versus the S&P 500's 8% over that same time period. In their investor presentation, they also showcase how they've compounded sales, earnings per share, operating cash flow and their dividend at a much faster rate than their competitors. So how does Lindy make money? Lindy supplies industrial gases, which are these critical resources for various parts of the economy. Industrial gases are essential inputs in most manufacturing processes, but they only make up a low single digit percentage of most cost structures. So being able to source these resources from a reliable producer is absolutely essential. A few examples might include Coke and Pepsi using carbon dioxide for carbonation, hospitals using oxygen for respiratory therapy, TSMC and Samsung using nitrogen and hydrogen for chip making, and steel makers using oxygen and argon for steel processing. The important thing for me at least from a business perspective, is that these are critical components to a well functioning economy. Hospitals cannot operate without oxygen and Coca Cola needs a partner like Linde to produce carbonation. Lindy's end markets are fairly well diversified with some being more cyclical than others. They're more resilient. End markets are healthcare, food and beverage and electronics and and their more cyclical end markets are chemicals and energy manufacturing and metals and mining. Lindy distributes its products three different ways. First is on site. This is their biggest long term contracts. These customers require the largest volumes of product which is typically oxygen, nitrogen or hydrogen and they have a relatively consistent demand pattern. So Lindia will make these huge capital investments to construct these plants on or adjacent to these customer sites and and supply the product directly to customers by pipeline. These contracts tend to range anywhere from 10 to 20 years and they contain minimum purchase requirements and price escalation provisions. So Lindy ensures that they're going to get their required return since they're putting this huge upfront investment to construct these plants. Today, on site distribution comprises of around 25% of Lindy's business. The second form of distribution is merchant distribution. These deliveries generally are made from Lindy's plants by tanker trucks to storage containers at their customers sites which are usually owned and maintained by Lindy and leased to the customer. Merchant distribution tends to be contracts around three to seven years. Through these merchant contracts, Lindy is able to leverage their existing infrastructure to deliver industrial gases to nearby customers. Since these contracts aren't as capital intensive, they're able to target a higher return on invested capital on these contracts. And today around one third of Lindy's business comes from merchant distribution. The third form of distribution is packaged Gas, which you can think of as smaller volume packages that are supplied in metal containers. Cylinders may be delivered to the customer site or picked up by the customer at a packaging facility or retail store. Packaged gases are generally sold under one to three year supply contracts and through purchase orders. This segment makes up more than one third of the overall business. All three of these distribution methods, on site, merchant and packaged, they're all sourced from the same air separation unit. The other beautiful part of the on site contracts that Lindy has in place is that even though these contracts might range from 10 to 20 years, they're almost always renewed. So Lindy is able to take these major contracts that they put in place and then they leverage these contracts to find opportunities to deliver the product to different customers and that are in close proximity. This creates an industry where there are several local monopolies. Because it's uneconomic to transport these gases more than 100 miles. You tend to only see one or two of these major industrial gas companies in each region holding that local monopoly or duopoly. So there's several attributes of this that are really attractive from an investor's perspective. So Lindy has all of these local monopolies or duopolies. Their products and services are mission critical. The products are a low overall percentage of the customer's overall spend. Think around 1, 2% and they have a high cost of failure. This is a formula that leads to a very sticky customer base and strong pricing power. Furthermore, Lindy typically includes cost pass through in their long term contracts, so they should be able to pass along inflation in any of their raw inputs onto the customer. Overall, the industrial gases industry has seen consolidation over the past 25 years. The market share for the top three players has gone from around 40% to over 60%. And return on capital in the industry has improved as the industry has consolidated. In 2000, the return on capital employed was around 10% for the industry. Today it's around 16%. This consolidation also highlights the network density required to operate profitably, which helps prevent new entrants from entering the space. Network density refers to Lindi's ability to serve many customers within a concentrated geographic footprint using shared infrastructure like pipelines, production plants and distribution routes. This density creates a major cost advantage because the more customers Lindy serves in a region, the more efficiently it can spread fixed costs across higher volumes. It also raises the barrier to entry since a new entrant would need to build massive capital intensive infrastructure without having enough local demand to operate economically. Over time, this dense network reinforces Lindy's local monopoly position and makes it extremely difficult for anyone to replicate their scale and reliability. Other aspects of their moat involve trust, reliability and their engineering expertise. So since they're the standard in the industry and they've built up the scale, there is little incentive for a new entrant to enter because the value proposition cannot be significantly improved upon. So even if someone does invest all of this capital and offer say a 10% discount on price, most manufacturers just aren't going to be interested because there's the risk that it doesn't work. And the industrial gases are a low percentage of overall spend anyway. So you might as well go with the proven players. And since gases are so critical to the manufacturing processes that Linde supports, choosing a reliable supplier is oftentimes a top consideration. Since Linde has a very dense network, they tend to be one of the most reliable sources. The other two big players in the industry are Air Liquid and Air Products. Air Liquide is headquartered in France and Aire Products is headquartered in Pennsylvania. Lindy has around one third of the market today, and the top three players add up to more than 70% of the overall market. Historically, Lindy has been the more disciplined player of the three. They're laser focused on cost discipline and return on invested capital. And of the three players, Lindy has the best return on capital. And one of the main reasons for that is how they're able to leverage their on site distribution systems to supply products to these customers. As a result, Lendi has historically generated much better returns for shareholders than their competitors as earnings per share over the past decade have grown at around 12% per annum. Management takes a balanced approach to capital allocation. Just over one third of cash flow gets deployed into share repurchases. One third of cash flow goes to CapEx and the remainder is distributed as a dividend. The management team is incentivized based on organic sales, net income, cash flow, return on capital, relative total shareholder return, and absolute stock appreciation. There are also thousands of managers on the ground operating these business segments globally that are also incentivized on many of the same metrics. What really stands out from listening to management on earnings calls is just their discipline. They're very clear that they will only pursue projects that meet strict return thresholds and are backed by long term contracts, even if that means walking away from growth opportunities that don't meet that criteria. They repeatedly emphasize not all growth is good and their $10 billion project backlog is designed to generate attractive returns and drive high quality earnings per share growth above all management consistently frames decisions through a long term lens, focusing on return on capital, durable competitive positioning and compounding shareholder value over multiple years rather than chasing short term volume or headline revenue growth. Management has noted that around two thirds of their backlog supports contracted clean energy projects, which aligns with the global push for decarbonization. Rather than speculating on commodity prices, Linde focuses on building out infrastructure that enables customers to reduce emissions through hydrogen, carbon capture and other low carbon solutions. Many of these projects strengthen Lindy's existing network density, creating additional opportunities to serve nearby customers and improve returns over time. Importantly, management remains disciplined, only pursuing clean energy investments that meet these strict return thresholds and are supported by high quality counterparties. In that way, this global energy transition, it becomes less of a risky bet for Linde and more of a long term play at a high level. I think Linde is a business that one should expect to grow alongside the broader growth of the economy, increasing volumes at around 2 to 4% per year. And part of the magic of this business has been their ability to capture these high return projects that improve margins and boost earnings per share. And this is despite not increasing their volume significantly. So, with 2 to 4% growth in volumes, you also have 2 to 3% growth in price. So those alone will generate 6 to 8% in earnings growth. And then they receive an additional boost to 10 to 12% earnings growth due to cost efficiencies and share repurchases. But it's also important to keep in mind that Linde's been operating through a somewhat lackluster manufacturing environment ever since 2021. So in 2021, volumes grew by 8%. But in the four years after that, volume growth over any calendar year has not exceeded 1%. However, management has been pushing prices to try and drive more of that revenue growth. So, jumping back to Linde and the Praxair merger. The merger closed in October of 2018. This merger has really worked out well for Linde because the industry benefits from consolidation and operating at scale. Higher network density leads to lower per unit costs, improved service and stronger pricing power. Just as importantly, the merger brought together Lindy's world class German engineering with Praxair's reputation for operational rigor and cost discipline. After the deal, the combined company streamlined overhead, optimized plan efficiency and gained significant procurement and logistics advantages from its larger footprint. Praxair's tighter approach to pricing and capital allocation also became more central, helping expand margins and strengthen free cash flow. Altogether, the merger turned Linde into a more efficient shareholder friendly industrial Gas powerhouse and even in a slower volume growth environment. So the question then becomes, how much more can Lindy continue to improve margins? Upon the merger with Praxair, Lindy started to identify areas where there were opportunities to improve margins. If a plant in Mexico was at 40% margin and another plant in Canada was half of that, management would be on their team to do what they need to do to get them to the margin level they needed to be at, whether that be hiking the price or adding necessary tools to improve the efficiency alongside pricing. Lindy's management team consistently frames productivity improvements as one driver of long term earnings growth. Even in weak demand environments, they emphasize that productivity is how they keep expanding margins. The business operates in a decentralized manner where they constantly have thousands of operational improvement projects happening, and they share these best practices for sites that have margin levels that need improvement. Increasingly, Lindy is leaning on technology, digital tools and even AI to accelerate these productivity gains, helping them optimize pricing, manage costs, and run plants more efficiently. Over time, these innovations give them another lever to keep expanding margins, even when volumes or the broader industrial economy is sluggish. I think it's reasonable to assume that margins will continue to expand over the next five years or so, but probably not at the rate that they've expanded since the merger with Praxair, since they've already identified a lot of the lower hanging fruits. Taking a look at the valuation, Linde trades at a premium to the overall market due to the business's durability and low terminal value risk. I think it's pretty fair to say that in 30 years, Lindy will still be providing industrial gases globally to industries that are, you know, a cornerstone of our daily lives. Things like healthcare chips, soft drinks, et cetera. The forward PE tends to trade in the mid-20s, or a 30 to 40% premium to the S&P 500. The market places a premium on Lindy's earnings because of the certainty with which they'll be able to continue to grow going forward. Pretty much no matter what happens over the next decade, the world is going to still need industrial gases. What I think is also important to consider is that volume growth has been quite modest in recent years, with the exception of 2021. So if we believe that the economy is cyclical and things eventually pick back up, then we could see a bit of a tailwind from economic growth, whether that be, you know, Europe's economy gaining traction, or the AI and data centers in the US providing a bit of a tailwind. Another key support for Lindy's long term growth is its $10 billion project backlog, with roughly two thirds of that tied to contracted clean energy investments, giving the company high visibility into future earnings. So as hydrogen decarbonization and advanced electronics infrastructure continue to scale globally, Lindy's positioned as an essential supplier to many of these projects. In the company's most recent earnings call, they guided for 6 to 9% growth in earnings per share and 0% base volume growth. Over the long term, management expects to grow earnings per share in the 10 to 12% range, which comes from a combination of raising prices, increasing efficiencies, buying back shares and reinvesting into future growth. Even in a stagnant manufacturing environment, Lindy seems pretty well positioned to continue to grow earnings per share at 10% plus. And if the manufacturing environment manages to pick up globally, then we could see Lindy benefit due to higher volumes, higher price increases and increased operating leverage. As people continue to talk about the potential of a recession in the near future, management has even gone as far to say that they've been going through an industrial recession for more than two years. While they're seeing massive investments in AI and digital infrastructure, traditional industrial markets like manufacturing, metals, chemicals and minings, they've been facing continued retrenchment. And Lindy's recent performance showcases their ability to continue to be prepared for the worst and ready to capitalize on any upside opportunities that exist. So Lindy grew earnings per share by 8% in 2024 and 7% in 2025 and that's honestly pretty remarkable given the macro backdrop that they've been facing. So I wouldn't be surprised to see a business like this to have some upside if the manufacturing base picks back up overall. So to wrap things up and summarize the Linde thesis, Linde operates in an attractive industry with rational players and offers products and services that are mission critical. They have an unrivaled network density which enables them to offer competitive prices and generate industry leading returns on capital. They're well positioned to continue growing with the global transition to clean energy. They have world class operators with a business owner mindset from top to bottom. They prioritize increasing efficiencies and achieving higher margins over time. And lastly, the business features best in class financial performance with unwavering capital discipline which positions them to continue to deliver solid returns for shareholders. From here, that wraps up all I have to share on LENDI today. I hope you found it useful or interesting in some way. So with that, thanks a lot for tuning in to today's episode. I hope to see you again next time.
