LECO Lincoln Electric Holdings Inc

Second Quarter 2024 Highlights

• Net sales of $1,022 million
• Operating income margin of 14.6%; Adjusted operating income margin of 17.4%
• EPS of $1.77; Adjusted EPS of $2.34
• Cash flows from operations of $171 million
• Returned $91 million to shareholders through dividends and share repurchases

 

Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported second quarter 2024 net income of $101.7 million, or diluted earnings per share (EPS) of $1.77, which includes special item after-tax net charges of $32.6 million, or $0.57 EPS. This compares with prior year period net income of $137.3 million, or $2.36 EPS, which included special item after-tax net charges of $4.9 million, or $0.08 EPS. Excluding special items, second quarter 2024 adjusted net income was $134.3 million, or $2.34 adjusted EPS. This compares with adjusted net income of $142.2 million, or $2.44 adjusted EPS, in the prior year period.

Second quarter 2024 sales decreased 3.7% to $1,022 million reflecting a 4.4% decrease in organic sales and a 1.2% benefit from acquisitions. Operating income for the second quarter 2024 was $148.8 million, or 14.6% of sales, as compared with operating income of $178.0 million, or 16.8% of sales, in the prior year period. Excluding special items, adjusted operating income was $177.6 million, or 17.4% of sales, as compared with $184.2 million, or 17.4% of sales, in the prior year period.

“Our solid second quarter profit, earnings and cash conversion results demonstrate the team’s effective cost management and execution of our strategic initiatives while navigating a more challenging portion of the cycle,” stated Steven B. Hedlund, President and Chief Executive Officer. “We continue to focus on long-term growth and margin enhancement through innovation, acquisitions, and operational excellence, which I am confident will extend Lincoln’s competitive position and generate superior value.”

Six Months 2024 Summary

Net income for the six months ended June 30, 2024 was $225.1 million, or $3.91 EPS, which includes special item after-tax net charges of $37.8 million, or $0.66 EPS. This compares with prior period net income of $259.3 million, or $4.44 EPS, which included special item after-tax net charges of $7.2 million, or $0.13 EPS. Excluding these items, adjusted net income for the six months ended June 30, 2024 decreased 1.3% to $262.9 million, or $4.57 EPS, compared with $266.5 million, or $4.57 EPS, in the comparable 2023 period.

Sales decreased 4.6% to $2,002.9 million in the six months ended June 30, 2024 reflecting a 5.3% decrease in organic sales. Operating income for the six months ended June 30, 2024 was $313.9 million, or 15.7% of sales. This compares with operating income of $342.4 million, or 16.3% of sales, in the comparable 2023 period. Excluding special items, adjusted operating income was $349.0 million, or 17.4% of sales, as compared with $353.3 million, or 16.8% of sales, in the comparable 2023 period.

Financing Activities

On June 20, 2024, the Company agreed to issue three new series of senior unsecured private placement notes (collectively the “Notes”) in the aggregate principal amount of $550 million. One series of Notes in the aggregate principal amount of $400 million was issued on June 20, 2024. The other two series of Notes will be issued on August 22, 2024. The Notes will have maturities ranging from 5 to 10 years with a weighted average effective interest rate of 5.2% including the impact of swaps. The proceeds of the Notes were used to repay the Company’s $400 million term loan and for general corporate purposes. Once the Notes are fully issued, the Company’s total debt will be $1.25 billion with a weighted average effective interest rate of 4.08% including the impact of swaps. In addition, on June 20, 2024, the Company entered into a new revolving credit facility to provide up to $1 billion of borrowing capacity. The new revolving credit facility will initially bear interest on outstanding borrowings at a per annum rate equal to SOFR plus 1.10% and could fluctuate based on the Company’s total net leverage ratio at a spread ranging from SOFR plus 1.10% to SOFR plus 1.60%.

Webcast Information

A conference call to discuss second quarter 2024 financial results will be webcast live today, July 31, 2024, at 10:00 a.m., Eastern Time. Those interested in participating via webcast in listen-only mode can access the event here or on the Company's Investor Relations home page at https://ir.lincolnelectric.com. For participants who would like to participate via telephone, please dial (888) 440-4368 (domestic) or (646) 960-0856 (international) and use confirmation code 6709091. A replay of the earnings call will be available via webcast on the Company's website.

About Lincoln Electric

Lincoln Electric is the world leader in the engineering, design, and manufacturing of advanced arc welding solutions, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment, and has a leading global position in brazing and soldering alloys. Lincoln is recognized as the Welding Expert™ for its leading materials science, software development, automation engineering, and application expertise, which advance customers’ fabrication capabilities to help them build a better world. Headquartered in Cleveland, Ohio, Lincoln operates 71 manufacturing and automation system integration locations across 21 countries and maintains a worldwide network of distributors and sales offices serving customers in over 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at https://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate, adjusted diluted earnings per share (“adjusted EPS”), Organic sales, Cash conversion, adjusted net operating profit after taxes and adjusted return on invested capital (“adjusted ROIC”) are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently.

Forward-Looking Statements

The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic, financial and market conditions; the effectiveness of commercial and operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as the impact of the Russia-Ukraine conflict, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Consolidated Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fav (Unfav) to

 

 

 

Three Months Ended June 30,

 

Prior Year

 

 

 

2024

 

% of Sales

 

2023

 

% of Sales

 

$

 

%

 

Net sales

 

$

1,021,683

 

 

100.0

%

$

1,060,565

 

100.0

%

$

(38,882)

 

(3.7)

%

Cost of goods sold

 

 

637,870

 

 

62.4

%

 

687,137

 

64.8

%

 

49,267

 

7.2

%

Gross profit

 

 

383,813

 

 

37.6

%

 

373,428

 

35.2

%

 

10,385

 

2.8

%

Selling, general & administrative expenses

 

 

208,485

 

 

20.4

%

 

192,748

 

18.2

%

 

(15,737)

 

(8.2)

%

Rationalization and asset impairment charges

 

 

26,490

 

 

2.6

%

 

2,667

 

0.3

%

 

(23,823)

 

(893.3)

%

Operating income

 

 

148,838

 

 

14.6

%

 

178,013

 

16.8

%

 

(29,175)

 

(16.4)

%

Interest expense, net

 

 

10,661

 

 

1.0

%

 

11,699

 

1.1

%

 

1,038

 

8.9

%

Other income (expense)

 

 

(1,553)

 

 

—

 

 

6,746

 

0.6

%

 

(8,299)

 

(123.0)

%

Income before income taxes

 

 

136,624

 

 

13.4

%

 

173,060

 

16.3

%

 

(36,436)

 

(21.1)

%

Income taxes

 

 

34,916

 

 

3.4

%

 

35,729

 

3.4

%

 

813

 

2.3

%

Effective tax rate

 

 

25.6

%

 

 

 

 

20.6

%

 

 

 

(5.0)

%

 

 

Net income

 

$

101,708

 

 

10.0

%

$

137,331

 

12.9

%

$

(35,623)

 

(25.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.79

 

 

 

 

$

2.39

 

 

 

$

(0.60)

 

(25.1)

%

Diluted earnings per share

 

$

1.77

 

 

 

 

$

2.36

 

 

 

$

(0.59)

 

(25.0)

%

Weighted average shares (basic)

 

 

56,816

 

 

 

 

 

57,479

 

 

 

 

 

 

 

 

Weighted average shares (diluted)

 

 

57,366

 

 

 

 

 

58,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fav (Unfav) to

 

 

 

Six Months Ended June 30,

 

Prior Year

 

 

 

2024

 

% of Sales

 

2023

 

% of Sales

 

$

 

%

 

Net sales

 

$

2,002,880

 

 

100.0

%

$

2,099,908

 

100.0

%

$

(97,028)

 

(4.6)

%

Cost of goods sold

 

 

1,250,668

 

 

62.4

%

 

1,371,123

 

65.3

%

 

120,455

 

8.8

%

Gross profit

 

 

752,212

 

 

37.6

%

 

728,785

 

34.7

%

 

23,427

 

3.2

%

Selling, general & administrative expenses

 

 

407,232

 

 

20.3

%

 

382,864

 

18.2

%

 

(24,368)

 

(6.4)

%

Rationalization and asset impairment charges

 

 

31,095

 

 

1.6

%

 

3,544

 

0.2

%

 

(27,551)

 

(777.4)

%

Operating income

 

 

313,885

 

 

15.7

%

 

342,377

 

16.3

%

 

(28,492)

 

(8.3)

%

Interest expense, net

 

 

19,440

 

 

1.0

%

 

24,899

 

1.2

%

 

5,459

 

21.9

%

Other income

 

 

709

 

 

0.0

%

 

10,926

 

0.5

%

 

(10,217)

 

(93.5)

%

Income before income taxes

 

 

295,154

 

 

14.7

%

 

328,404

 

15.6

%

 

(33,250)

 

(10.1)

%

Income taxes

 

 

70,031

 

 

3.5

%

 

69,142

 

3.3

%

 

(889)

 

(1.3)

%

Effective tax rate

 

 

23.7

%

 

 

 

 

21.1

%

 

 

 

(2.6)

%

 

 

Net income

 

$

225,123

 

 

11.2

%

$

259,262

 

12.3

%

$

(34,139)

 

(13.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

3.96

 

 

 

 

$

4.51

 

 

 

$

(0.55)

 

(12.2)

%

Diluted earnings per share

 

$

3.91

 

 

 

 

$

4.44

 

 

 

$

(0.53)

 

(11.9)

%

Weighted average shares (basic)

 

 

56,841

 

 

 

 

 

57,537

 

 

 

 

 

 

 

 

Weighted average shares (diluted)

 

 

57,505

 

 

 

 

 

58,353

 

 

 

 

 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands)

(Unaudited)

 

Balance Sheet Highlights

 

 

 

 

 

 

 

 

 

Selected Consolidated Balance Sheet Data

 

June 30, 2024

 

December 31, 2023

 

Cash and cash equivalents

 

$

272,672

 

$

393,787

 

Accounts receivable, net

 

 

549,237

 

 

538,830

 

Inventories

 

 

582,730

 

 

562,864

 

Total current assets

 

 

1,613,106

 

 

1,693,111

 

Property, plant and equipment, net

 

 

583,832

 

 

575,316

 

Total assets

 

 

3,415,249

 

 

3,377,297

 

Trade accounts payable

 

 

351,445

 

 

325,435

 

Total current liabilities

 

 

783,567

 

 

754,610

 

Short-term debt (1)

 

 

6,254

 

 

2,439

 

Long-term debt, less current portion

 

 

1,098,430

 

 

1,102,771

 

Total equity

 

 

1,312,906

 

 

1,308,852

 

 

 

 

 

 

 

 

 

Operating Working Capital

 

June 30, 2024

 

December 31, 2023

 

Average operating working capital to Net sales (2)

 

 

18.0

%

 

17.1

%

 

 

 

 

 

 

 

 

Invested Capital

 

June 30, 2024

 

December 31, 2023

 

Short-term debt (1)

 

$

6,254

 

$

2,439

 

Long-term debt, less current portion

 

 

1,098,430

 

 

1,102,771

 

Total debt

 

 

1,104,684

 

 

1,105,210

 

Total equity

 

 

1,312,906

 

 

1,308,852

 

Invested capital

 

$

2,417,590

 

$

2,414,062

 

 

 

 

 

 

 

 

 

Total debt / invested capital

 

 

45.7

%

 

45.8

%

(1)

 

Includes current portion of long-term debt.

(2)

 

Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

2023

 

 

2024

 

2023

 

Operating income as reported

 

$

148,838

 

$

178,013

 

 

$

313,885

 

$

342,377

 

Special items (pre-tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rationalization and asset impairment charges (2)

 

 

26,490

 

 

2,667

 

 

 

31,095

 

 

3,544

 

Acquisition transaction costs (3)

 

 

2,182

 

 

—

 

 

 

3,944

 

 

—

 

Amortization of step up in value of acquired inventories (4)

 

 

112

 

 

3,545

 

 

 

112

 

 

7,401

 

Adjusted operating income (1)

 

$

177,622

 

$

184,225

 

 

$

349,036

 

$

353,322

 

As a percent of net sales

 

 

17.4

%

 

17.4

%

 

 

17.4

%

 

16.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income as reported

 

$

101,708

 

$

137,331

 

 

$

225,123

 

$

259,262

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rationalization and asset impairment charges (2)

 

 

26,490

 

 

2,667

 

 

 

31,095

 

 

3,544

 

Acquisition transaction costs (3)

 

 

2,182

 

 

—

 

 

 

3,944

 

 

—

 

Amortization of step up in value of acquired inventories (4)

 

 

112

 

 

3,545

 

 

 

112

 

 

7,401

 

Loss (gain) on asset disposal (5)

 

 

4,950

 

 

—

 

 

 

4,950

 

 

(1,646)

 

Tax effect of Special items (6)

 

 

(1,182)

 

 

(1,311)

 

 

 

(2,308)

 

 

(2,129)

 

Adjusted net income (1)

 

 

134,260

 

 

142,232

 

 

 

262,916

 

 

266,432

 

Interest expense, net

 

 

10,661

 

 

11,699

 

 

 

19,440

 

 

24,899

 

Income taxes as reported

 

 

34,916

 

 

35,729

 

 

 

70,031

 

 

69,142

 

Tax effect of Special items (6)

 

 

1,182

 

 

1,311

 

 

 

2,308

 

 

2,129

 

Adjusted EBIT (1)

 

$

181,019

 

$

190,971

 

 

$

354,695

 

$

362,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate as reported

 

 

25.6

%

 

20.6

%

 

 

23.7

%

 

21.1

%

Net special item tax impact

 

 

(4.4)

%

 

0.1

%

 

 

(2.1)

%

 

—

 

Adjusted effective tax rate (1)

 

 

21.2

%

 

20.7

%

 

 

21.6

%

 

21.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share as reported

 

$

1.77

 

$

2.36

 

 

$

3.91

 

$

4.44

 

Special items per share

 

 

0.57

 

 

0.08

 

 

 

0.66

 

 

0.13

 

Adjusted diluted earnings per share (1)

 

$

2.34

 

$

2.44

 

 

$

4.57

 

$

4.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares (diluted)

 

 

57,366

 

 

58,303

 

 

 

57,505

 

 

58,353

 

(1)

 

Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate and adjusted diluted EPS are non-GAAP financial measures. Refer to Non-GAAP Information section.

(2)

 

Primarily related to rationalization plans previously initiated within International Welding, including disposition of the Company’s Russian entity, and The Harris Products Group.

(3)

 

Related to acquisitions and are included in Selling, general & administrative expenses.

(4)

 

Related to acquisitions and are included in Cost of goods sold.

(5)

 

Loss (gain) on asset disposal and included in Other income (expense).

(6)

 

Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended June 30,

 

Return on Invested Capital

 

2024

 

2023

 

Net income as reported

 

$

511,110

 

$

477,633

 

Plus: Interest expense (after-tax)

 

 

36,607

 

 

33,234

 

Less: Interest income (after-tax)

 

 

7,654

 

 

1,999

 

Net operating profit after taxes

 

$

540,063

 

$

508,868

 

Special Items:

 

 

 

 

 

 

 

Rationalization and asset impairment charges

 

 

16,237

 

 

14,291

 

Acquisition transaction costs

 

 

3,944

 

 

6,003

 

Pension settlement charges

 

 

845

 

 

—

 

Amortization of step up in value of acquired inventories

 

 

4,964

 

 

7,048

 

Loss (gain) on asset disposal

 

 

4,950

 

 

(1,646)

 

Tax effect of Special items (2)

 

 

2,357

 

 

(4,110)

 

Adjusted net operating profit after taxes (1)

 

$

573,360

 

$

530,454

 

 

 

 

 

 

 

 

 

Invested Capital

 

June 30, 2024

 

June 30, 2023

 

Short-term debt

 

$

6,254

 

$

10,406

 

Long-term debt, less current portion

 

 

1,098,430

 

 

1,103,898

 

Total debt

 

 

1,104,684

 

 

1,114,304

 

Total equity

 

 

1,312,906

 

 

1,201,424

 

Invested capital

 

$

2,417,590

 

$

2,315,728

 

 

 

 

 

 

 

 

 

Return on invested capital as reported

 

 

22.3

%

 

22.0

%

Adjusted return on invested capital (1)

 

 

23.7

%

 

22.9

%

(1)

 

Adjusted net operating profit after taxes and adjusted ROIC are non-GAAP financial measures.  Refer to Non-GAAP Information section.

(2)

 

Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate.  The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Condensed Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2024

 

2023

OPERATING ACTIVITIES:

 

 

 

 

 

Net income

$

101,708

 

 

$

137,331

 

Adjustments to reconcile Net income to Net cash provided by operating activities:

 

 

 

 

 

Rationalization and asset impairment net charges

 

23,687

 

 

 

1,134

 

Depreciation and amortization

 

20,865

 

 

 

21,917

 

Other non-cash items, net

 

4,589

 

 

 

22,074

 

Changes in operating assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

(Increase) decrease in accounts receivable

 

(4,881

)

 

 

8,774

 

(Increase) decrease in inventories

 

(18,210

)

 

 

76

 

Increase (decrease) in trade accounts payable

 

24,999

 

 

 

(5,275

)

Net change in other current assets and liabilities

 

(5,455

)

 

 

21,574

 

Net change in other long-term assets and liabilities

 

23,385

 

 

 

(8,760

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

170,687

 

 

 

198,845

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(23,139

)

 

 

(21,765

)

Acquisition of businesses, net of cash acquired

 

(152,654

)

 

 

(32,657

)

Proceeds from sale of property, plant and equipment

 

987

 

 

 

578

 

Purchase of marketable securities

 

—

 

 

 

(6,453

)

NET CASH USED BY INVESTING ACTIVITIES

 

(174,806

)

 

 

(60,297

)

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

Payments on short-term borrowings

 

(2,594

)

 

 

(28,277

)

Proceeds from long-term borrowings

 

400,000

 

 

 

—

 

Payments on long-term borrowings

 

(400,170

)

 

 

(6,875

)

Proceeds from exercise of stock options

 

543

 

 

 

9,534

 

Purchase of shares for treasury

 

(50,415

)

 

 

(53,075

)

Cash dividends paid to shareholders

 

(40,416

)

 

 

(36,889

)

NET CASH USED BY FINANCING ACTIVITIES

 

(93,052

)

 

 

(115,582

)

 

 

 

 

 

 

Effect of exchange rate changes on Cash and cash equivalents

 

(5,135

)

 

 

(1,286

)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(102,306

)

 

 

21,680

 

Cash and cash equivalents at beginning of period

 

374,978

 

 

 

198,803

 

Cash and cash equivalents at end of period

$

272,672

 

 

$

220,483

 

 

 

 

 

 

 

Cash dividends paid per share

$

0.71

 

 

$

0.64

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Condensed Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2024

 

2023

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

225,123

 

 

$

259,262

 

Adjustments to reconcile Net income to Net cash provided by operating activities:

 

 

 

 

 

 

Rationalization and asset impairment net charges

 

 

23,751

 

 

 

1,134

 

Depreciation and amortization

 

 

42,451

 

 

 

43,212

 

Other non-cash items, net

 

 

16,535

 

 

 

21,386

 

Changes in operating assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

 

Increase in accounts receivable

 

 

(14,484

)

 

 

(18,890

)

(Increase) decrease in inventories

 

 

(27,626

)

 

 

6,267

 

Increase in trade accounts payable

 

 

28,956

 

 

 

1,566

 

Net change in other current assets and liabilities

 

 

(10,245

)

 

 

15,474

 

Net change in other long-term assets and liabilities

 

 

19,520

 

 

 

(6,635

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

303,981

 

 

 

322,776

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital expenditures

 

 

(49,395

)

 

 

(40,552

)

Acquisition of businesses, net of cash acquired

 

 

(152,654

)

 

 

(32,657

)

Proceeds from sale of property, plant and equipment

 

 

1,303

 

 

 

3,892

 

Purchase of marketable securities

 

 

—

 

 

 

(7,029

)

NET CASH USED BY INVESTING ACTIVITIES

 

 

(200,746

)

 

 

(76,346

)

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on short-term borrowings

 

 

(578

)

 

 

(72,224

)

Proceeds from long-term borrowings

 

 

400,000

 

 

 

—

 

Payments on long-term borrowings

 

 

(400,339

)

 

 

(6,978

)

Proceeds from exercise of stock options

 

 

24,981

 

 

 

12,010

 

Purchase of shares for treasury

 

 

(160,820

)

 

 

(85,234

)

Cash dividends paid to shareholders

 

 

(81,696

)

 

 

(74,472

)

NET CASH USED BY FINANCING ACTIVITIES

 

 

(218,452

)

 

 

(226,898

)

 

 

 

 

 

 

 

Effect of exchange rate changes on Cash and cash equivalents

 

 

(5,898

)

 

 

3,801

 

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(121,115

)

 

 

23,333

 

Cash and cash equivalents at beginning of period

 

 

393,787

 

 

 

197,150

 

Cash and cash equivalents at end of period

 

$

272,672

 

 

$

220,483

 

 

 

 

 

 

 

 

Cash dividends paid per share

 

$

1.42

 

 

$

1.28

 

Lincoln Electric Holdings, Inc.

Segment Highlights (1)

(In thousands)

(Unaudited)

 

 

 

Americas

 

International

 

The Harris

 

Corporate /

 

 

 

 

 

 

Welding

 

Welding

 

Products Group

 

Eliminations

 

Consolidated

 

Three months ended June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

648,936

 

$

238,758

 

$

133,989

 

$

—

 

$

1,021,683

 

Inter-segment sales

 

 

37,800

 

 

8,849

 

 

3,272

 

 

(49,921)

 

 

—

 

Total sales

 

$

686,736

 

$

247,607

 

$

137,261

 

$

(49,921)

 

$

1,021,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

101,708

 

As a percent of total sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT (1)

 

$

136,297

 

$

(5,525)

 

$

25,063

 

$

(8,550)

 

$

147,285

 

As a percent of total sales

 

 

19.8

%

 

(2.2)

%

 

18.3

%

 

 

 

 

14.4

%

Special items charges (3)

 

 

354

 

 

31,234

 

 

(140)

 

 

2,286

 

 

33,734

 

Adjusted EBIT (2)

 

$

136,651

 

$

25,709

 

$

24,923

 

$

(6,264)

 

$

181,019

 

As a percent of total sales

 

 

19.9

%

 

10.4

%

 

18.2

%

 

 

 

 

17.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

676,966

 

$

253,403

 

$

130,196

 

$

—

 

$

1,060,565

 

Inter-segment sales

 

 

30,850

 

 

8,292

 

 

2,867

 

 

(42,009)

 

 

—

 

Total sales

 

$

707,816

 

$

261,695

 

$

133,063

 

$

(42,009)

 

$

1,060,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

137,331

 

As a percent of total sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT (1)

 

$

136,913

 

$

30,519

 

$

19,510

 

$

(2,183)

 

$

184,759

 

As a percent of total sales

 

 

19.3

%

 

11.7

%

 

14.7

%

 

 

 

 

17.4

%

Special items charges (4)

 

 

2,957

 

 

3,255

 

 

—

 

 

—

 

 

6,212

 

Adjusted EBIT (2)

 

$

139,870

 

$

33,774

 

$

19,510

 

$

(2,183)

 

$

190,971

 

As a percent of total sales

 

 

19.8

%

 

12.9

%

 

14.7

%

 

 

 

 

18.0

%

(1)

 

EBIT is defined as Operating income plus Other income.

(2)

 

The primary profit measure used by management to assess segment performance is adjusted EBIT.  EBIT for each operating segment is adjusted for special items to derive adjusted EBIT.

(3)

 

Special items in 2024 primarily reflect rationalization net charges of $26,284 in International Welding, primarily due to the impact of the Company’s disposition of its Russian entity, a loss on asset disposal of $4,950 recorded to Other income (expense) in International Welding, and acquisition transaction costs of $2,182 in Corporate/Eliminations.

(4)

 

Special items in 2023 primarily reflect amortization of step up in value of acquired inventories of $2,957 and $588 in Americas and International Welding, respectively, and rationalization and asset impairment net charges of $2,667 in International Welding.

Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

International

 

The Harris

 

Corporate /

 

 

 

 

 

 

Welding

 

Welding

 

Products Group

 

Eliminations

 

Consolidated

 

Six months ended June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,273,035

 

$

474,519

 

$

255,326

 

$

—

 

$

2,002,880

 

Inter-segment sales

 

 

67,778

 

 

17,257

 

 

6,365

 

 

(91,400)

 

 

—

 

Total sales

 

$

1,340,813

 

$

491,776

 

$

261,691

 

$

(91,400)

 

$

2,002,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

225,123

 

As a percent of total sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT (1)

 

$

272,396

 

$

19,182

 

$

43,406

 

$

(20,390)

 

$

314,594

 

As a percent of total sales

 

 

20.3

%

 

3.9

%

 

16.6

%

 

 

 

 

15.7

%

Special items charges (3)

 

 

354

 

 

34,304

 

 

1,396

 

 

4,047

 

 

40,101

 

Adjusted EBIT (2)

 

$

272,750

 

$

53,486

 

$

44,802

 

$

(16,343)

 

$

354,695

 

As a percent of total sales

 

 

20.3

%

 

10.9

%

 

17.1

%

 

 

 

 

17.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,335,611

 

$

505,819

 

$

258,478

 

$

—

 

$

2,099,908

 

Inter-segment sales

 

 

63,168

 

 

15,045

 

 

5,764

 

 

(83,977)

 

 

—

 

Total sales

 

$

1,398,779

 

$

520,864

 

$

264,242

 

$

(83,977)

 

$

2,099,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

259,262

 

As a percent of total sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT (1)

 

$

266,582

 

$

59,814

 

$

38,493

 

$

(11,586)

 

$

353,303

 

As a percent of total sales

 

 

19.1

%

 

11.5

%

 

14.6

%

 

 

 

 

16.8

%

Special items charges (4)

 

 

5,742

 

 

3,557

 

 

—

 

 

—

 

 

9,299

 

Adjusted EBIT (2)

 

$

272,324

 

$

63,371

 

$

38,493

 

$

(11,586)

 

$

362,602

 

As a percent of total sales

 

 

19.5

%

 

12.2

%

 

14.6

%

 

 

 

 

17.3

%

(1)

 

EBIT is defined as Operating income plus Other income.

(2)

 

The primary profit measure used by management to assess segment performance is adjusted EBIT.  EBIT for each operating segment is adjusted for special items to derive adjusted EBIT.

(3)

 

Special items in 2024 primarily reflect rationalization net charges of $29,354 in International Welding, primarily due to the impact of the Company’s disposition of its Russian entity, and $1,396 in the Harris Products Group, a loss on asset disposal of $4,950 recorded to Other income (expense) in International Welding, and acquisition transaction costs of $3,944 in Corporate/Eliminations.

(4)

 

Special items in 2023 primarily reflect amortization of step up in value of acquired inventories of $5,742 and $1,659 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $3,544 in International Welding, and a gain on asset disposal of $1,646 in International Welding.

Lincoln Electric Holdings, Inc.

Change in Net Sales by Segment

(In thousands)

(Unaudited)

 

Three Months Ended June 30th Change in Net Sales by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Net Sales due to:

 

 

 

 

 

Net Sales

 

 

 

 

 

 

 

 

 

 

Foreign

 

Net Sales

 

 

2023

 

Volume

 

Acquisitions

 

Price

 

Exchange

 

2024

 

Operating Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas Welding

$

676,966

 

$

(45,665

)

 

$

12,420

 

$

6,522

 

 

$

(1,307

)

 

$

648,936

 

 

International Welding

 

253,403

 

 

(9,557

)

 

 

57

 

 

(3,149

)

 

 

(1,996

)

 

 

238,758

 

 

The Harris Products Group

 

130,196

 

 

(2,523

)

 

 

—

 

 

6,728

 

 

 

(412

)

 

 

133,989

 

 

Consolidated

$

1,060,565

 

$

(57,745

)

 

$

12,477

 

$

10,101

 

 

$

(3,715

)

 

$

1,021,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas Welding

 

 

 

 

(6.7

)

%

 

1.8

%

 

1.0

 

%

 

(0.2

)

%

 

(4.1

)

%

International Welding

 

 

 

 

(3.8

)

%

 

0.0

%

 

(1.2

)

%

 

(0.8

)

%

 

(5.8

)

%

The Harris Products Group

 

 

 

 

(1.9

)

%

 

—

 

 

5.2

 

%

 

(0.3

)

%

 

2.9

 

%

Consolidated

 

 

 

 

(5.4

)

%

 

1.2

%

 

1.0

 

%

 

(0.4

)

%

 

(3.7

)

%

Six Months Ended June 30th Change in Net Sales by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Net Sales due to:

 

 

 

 

 

 

Net Sales

 

 

 

 

 

 

 

 

 

 

Foreign

 

Net Sales

 

 

 

2023

 

Volume

 

Acquisitions

 

Price

 

Exchange

 

2024

 

Operating Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas Welding

 

$

1,335,611

 

$

(88,318

)

 

$

16,584

 

$

8,806

 

 

$

352

 

 

$

1,273,035

 

 

International Welding

 

 

505,819

 

 

(21,829

)

 

 

57

 

 

(7,159

)

 

 

(2,369

)

 

 

474,519

 

 

The Harris Products Group

 

 

258,478

 

 

(11,379

)

 

 

—

 

 

8,171

 

 

 

56

 

 

 

255,326

 

 

Consolidated

 

$

2,099,908

 

$

(121,526

)

 

$

16,641

 

$

9,818

 

 

$

(1,961

)

 

$

2,002,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas Welding

 

 

 

 

 

(6.6

)

%

 

1.2

%

 

0.7

 

%

 

0.0

 

%

 

(4.7

)

%

International Welding

 

 

 

 

 

(4.3

)

%

 

0.0

%

 

(1.4

)

%

 

(0.5

)

%

 

(6.2

)

%

The Harris Products Group

 

 

 

 

 

(4.4

)

%

 

—

 

 

3.2

 

%

 

0.0

 

%

 

(1.2

)

%

Consolidated

 

 

 

 

 

(5.8

)

%

 

0.8

%

 

0.5

 

%

 

(0.1

)

%

 

(4.6

)

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731726185/en/

Amanda Butler Vice President, Investor Relations & Communications Tel: 216.383.2534 Email: Amanda_Butler@lincolnelectric.com