LECO 8-K
Lincoln Electric Holdings Inc (LECO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02 | Results of Operations and Financial Condition. | |
On October 27, 2023, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended September 30, 2023. A copy of the Company’s press release issued on October 27, 2023 is attached hereto as Exhibit 99.1 and incorporated herein by reference. The press release is also available through the Company’s website at www.lincolnelectric.com. The information in this Current Report on Form 8-K, including the Exhibit, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act. | ||
Item 9.01 | Financial Statements and Exhibits. | |
(d) Exhibits | ||
99.1 The Company’s press release dated October 27, 2023. | ||
104 Cover page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments) | ||
LINCOLN ELECTRIC HOLDINGS, INC.
INDEX TO EXHIBITS
Exhibit No. |
| Exhibit |
|---|---|---|
104 | Cover page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LINCOLN ELECTRIC HOLDINGS, INC. | |
/s/ Gabriel Bruno | |
Gabriel Bruno | |
Executive Vice President, Chief Financial Officer and Treasurer | |
(Principal Financial and Accounting Officer) | |
October 27, 2023 |
Exhibit 99.1
Investor Relations: Amanda Butler (216) 383-2534
LINCOLN ELECTRIC REPORTS THIRD QUARTER 2023 RESULTS
Third Quarter 2023 Highlights |
◾ Net sales increase 10.5% to record $1,033 million ◾ Operating income margin of 16.6%; Record adjusted operating income margin of 17.7% ◾ Record EPS of $2.22; Record adjusted EPS of $2.40 ◾ Cash flows from operations increase 71% to record $223 million with 141% cash conversion(1) ◾ Returned $82 million to shareholders through dividends and share repurchases |
CLEVELAND, Friday, October 27, 2023 - Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2023 net income of $129.3 million, or diluted earnings per share (EPS) of $2.22, which includes special item after-tax net charges of $10.1 million, or $0.18 EPS. This compares with prior year period net income of $109.2 million, or $1.87 EPS, which included special item after-tax net charges of $10.3 million. Excluding special items, third quarter 2023 adjusted net income was $139.5 million, or $2.40 adjusted EPS. This compares with adjusted net income of $119.6 million, or $2.04 adjusted EPS, in the prior year period.
Third quarter 2023 sales increased 10.5% to $1,033.2 million reflecting a 0.4% increase in organic sales, an 8.8% benefit from acquisitions and 1.2% favorable foreign exchange. Operating income for the third quarter 2023 was $171.4 million, or 16.6% of sales. This compares with operating income of $142.1 million, or 15.2% of sales, in the prior year period. Excluding special items, adjusted operating income was $183.4 million, or 17.7% of sales, as compared with $153.2 million, or 16.4% of sales, in the prior year period.
“I am pleased to report another quarter of record sales, profit, earnings, and cash flow performance,” commented Christopher L. Mapes, Chairman, President and Chief Executive Officer. "Our results reflect our commitment to putting customers first, delivering innovative solutions, maintaining effective price/cost management, and successfully executing our Higher Standard Strategy initiatives.” Mapes continued, “Our strong third quarter sales performance reflects acceleration from our automation acquisitions and low-to-mid single digit percent volume growth in our welding segments when normalizing third quarter shipping days to prior year. Given the resilience of key end markets, strong October order rates, and a high backlog of fourth quarter automation shipments, we expect to maintain strong sales performance through year-end,” Mapes concluded.
Nine Months 2023 Summary
Net income for the nine months ended September 30, 2023 was $388.6 million, or $6.67 EPS, which includes special item after-tax net charges of $17.3 million, or $0.30 EPS. This compares with prior period net income of $363.1 million, or $6.17 EPS, which included special item after-tax net charges of $9.4 million, or $0.16 EPS. Excluding special items, adjusted net income for the nine months ended September 30, 2023 increased 9.0% to $405.9 million, or $6.97 EPS, compared with $372.4 million, or $6.33 EPS, in the prior year period.
Sales increased 10.7% to $3,133.1 million in the nine months ended September 30, 2023 reflecting a 4.5% increase in organic sales and a 6.5% benefit from acquisitions, partially offset by 0.3% unfavorable foreign exchange. Operating income for the nine months ended September 30, 2023 was $513.8 million, or 16.4% of sales. This compares with operating income of $470.8 million, or 16.6% of sales, in the prior year period. Excluding special items, adjusted operating income was $536.7 million, or 17.1% of sales, as compared with $484.4 million, or 17.1% of sales, in the prior year period.
_______________________________________________________________________________
| (1) | Cash conversion is defined as net cash provided by operating activities less capital expenditures divided by adjusted net income. |
LINCOLN ELECTRIC REPORTS THIRD QUARTER 2023 RESULTS
Dividend
The Company’s Board of Directors declared an 11% increase in the quarterly cash dividend, from $0.64 per share to $0.71 per share, or $2.84 per share on an annual basis. The declared quarterly cash dividend of $0.71 per share is payable January 12, 2024 to shareholders of record as of December 31, 2023.
Webcast Information
A conference call to discuss third quarter 2023 financial results will be webcast live today, October 27, 2023, 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 register here to receive the dial-in number along with a unique PIN number that is required to access the call. 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 has 71 manufacturing locations in 20 countries and 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, 2022.
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Income
|
| | | | | | | | | | |
| Fav (Unfav) to |
| |||
| | Three Months Ended September 30, | | Prior Year |
| ||||||||||||
| | 2023 | | % of Sales |
| 2022 |
| % of Sales | | $ | | % |
| ||||
Net sales | | $ | 1,033,214 |
| | 100.0 | % | $ | 935,240 |
| 100.0 | % | $ | 97,974 | | 10.5 | % |
Cost of goods sold | | | 667,584 |
| | 64.6 | % | | 625,722 |
| 66.9 | % |
| (41,862) | | (6.7) | % |
Gross profit | |
| 365,630 |
| | 35.4 | % |
| 309,518 |
| 33.1 | % |
| 56,112 | | 18.1 | % |
Selling, general & administrative expenses | |
| 187,115 |
| | 18.1 | % |
| 159,045 |
| 17.0 | % |
| (28,070) | | (17.6) | % |
Rationalization and asset impairment charges | |
| 7,074 |
| | 0.7 | % |
| 8,364 |
| 0.9 | % |
| 1,290 | | 15.4 | % |
Operating income | |
| 171,441 |
| | 16.6 | % |
| 142,109 |
| 15.2 | % |
| 29,332 | | 20.6 | % |
Interest expense, net | |
| 10,809 |
| | 1.0 | % |
| 8,210 |
| 0.9 | % |
| (2,599) | | (31.7) | % |
Other income | |
| 801 |
| | 0.1 | % |
| 3,588 |
| 0.4 | % |
| (2,787) | | (77.7) | % |
Income before income taxes | |
| 161,433 |
| | 15.6 | % |
| 137,487 |
| 14.7 | % |
| 23,946 | | 17.4 | % |
Income taxes | |
| 32,090 |
| | 3.1 | % |
| 28,262 |
| 3.0 | % |
| (3,828) | | (13.5) | % |
Effective tax rate | |
| 19.9 | % | | | |
| 20.6 | % |
| |
| 0.7 | % |
| |
Net income | | $ | 129,343 |
| | 12.5 | % | $ | 109,225 |
| 11.7 | % | $ | 20,118 | | 18.4 | % |
| | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 2.26 | | | | | $ | 1.89 |
| | | $ | 0.37 | | 19.6 | % |
Diluted earnings per share | | $ | 2.22 | | | | | $ | 1.87 |
| | | $ | 0.35 | | 18.7 | % |
Weighted average shares (basic) | |
| 57,320 | |
| | |
| 57,823 |
|
| |
|
| |
| |
Weighted average shares (diluted) | |
| 58,136 | |
| | |
| 58,526 |
|
| |
| | |
| |
|
| | | | | | | | | | |
| Fav (Unfav) to |
| |||
| | Nine Months Ended September 30, | | Prior Year |
| ||||||||||||
|
| 2023 | | % of Sales |
| 2022 | | % of Sales |
| $ | | % |
| ||||
Net sales | | $ | 3,133,122 |
| | 100.0 | % | $ | 2,830,277 |
| 100.0 | % | $ | 302,845 | | 10.7 | % |
Cost of goods sold | |
| 2,038,707 |
| | 65.1 | % | | 1,857,501 |
| 65.6 | % |
| (181,206) | | (9.8) | % |
Gross profit | |
| 1,094,415 |
| | 34.9 | % | | 972,776 |
| 34.4 | % |
| 121,639 | | 12.5 | % |
Selling, general & administrative expenses | |
| 569,979 |
| | 18.2 | % | | 492,523 |
| 17.4 | % |
| (77,456) | | (15.7) | % |
Rationalization and asset impairment charges | |
| 10,618 |
| | 0.3 | % | | 9,405 |
| 0.3 | % |
| (1,213) | | (12.9) | % |
Operating income | |
| 513,818 |
| | 16.4 | % | | 470,848 |
| 16.6 | % |
| 42,970 | | 9.1 | % |
Interest expense, net | |
| 35,708 |
| | 1.1 | % | | 20,867 |
| 0.7 | % |
| (14,841) | | (71.1) | % |
Other income | |
| 11,727 |
| | 0.4 | % | | 7,088 |
| 0.3 | % |
| 4,639 | | 65.4 | % |
Income before income taxes | |
| 489,837 |
| | 15.6 | % | | 457,069 |
| 16.1 | % |
| 32,768 | | 7.2 | % |
Income taxes | |
| 101,232 |
| | 3.2 | % | | 93,991 |
| 3.3 | % |
| (7,241) | | (7.7) | % |
Effective tax rate | |
| 20.7 | % | | | | | 20.6 | % |
| |
| (0.1) | % |
| |
Net income | | $ | 388,605 |
| | 12.4 | % | $ | 363,078 |
| 12.8 | % | $ | 25,527 | | 7.0 | % |
| | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 6.76 | | | |
| $ | 6.24 |
| | | $ | 0.52 | | 8.3 | % |
Diluted earnings per share | | $ | 6.67 | | | |
| $ | 6.17 |
| | | $ | 0.50 | | 8.1 | % |
Weighted average shares (basic) | |
| 57,465 | | | |
| | 58,148 |
|
| |
|
| |
| |
Weighted average shares (diluted) | |
| 58,277 | | | |
| | 58,815 |
|
| |
|
| |
| |
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Balance Sheet Highlights
Selected Consolidated Balance Sheet Data |
| September 30, 2023 |
| December 31, 2022 |
| ||
Cash and cash equivalents | | $ | 342,667 | | $ | 197,150 | |
Accounts receivable, net | | | 537,637 | | | 541,529 | |
Inventories | |
| 612,338 | |
| 665,451 | |
Total current assets | |
| 1,672,294 | |
| 1,557,790 | |
Property, plant and equipment, net | |
| 565,875 | |
| 544,871 | |
Total assets | |
| 3,325,895 | |
| 3,180,546 | |
Trade accounts payable | |
| 328,460 | |
| 352,079 | |
Total current liabilities | |
| 808,142 | |
| 852,897 | |
Short-term debt (1) | |
| 7,700 | |
| 93,483 | |
Long-term debt, less current portion | |
| 1,102,858 | |
| 1,110,396 | |
Total equity | |
| 1,225,582 | |
| 1,034,041 | |
| | | | | | | |
Operating Working Capital | | September 30, 2023 | | December 31, 2022 | | ||
Average operating working capital to Net sales (2) | |
| 18.3 | % |
| 20.9 | % |
| | | | | | | |
Invested Capital | | September 30, 2023 | | December 31, 2022 | | ||
Short-term debt (1) | | $ | 7,700 | | $ | 93,483 | |
Long-term debt, less current portion | |
| 1,102,858 | |
| 1,110,396 | |
Total debt | |
| 1,110,558 | |
| 1,203,879 | |
Total equity | |
| 1,225,582 | |
| 1,034,041 | |
Invested capital | | $ | 2,336,140 | | $ | 2,237,920 | |
| | | | | | | |
Total debt / invested capital | |
| 47.5 | % |
| 53.8 | % |
(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 September 30, |
| | Nine Months Ended September 30, |
| ||||||||
| | 2023 | | 2022 | | | 2023 | | 2022 |
| ||||
Operating income as reported | | $ | 171,441 | | $ | 142,109 |
| | $ | 513,818 | | $ | 470,848 | |
Special items (pre-tax): | |
|
| |
|
|
| | |
| |
|
| |
Rationalization and asset impairment charges (2) | |
| 7,074 | |
| 8,364 |
| | | 10,618 | |
| 9,405 | |
Acquisition transaction costs (3) | |
| — | |
| 3,068 |
| | | — | |
| 3,068 | |
Amortization of step up in value of acquired inventories (4) | |
| 4,852 | |
| (353) |
| | | 12,252 | |
| 1,106 | |
Adjusted operating income (1) | | $ | 183,367 | | $ | 153,188 |
| | $ | 536,688 | | $ | 484,427 | |
As a percent of net sales | |
| 17.7 | % |
| 16.4 | % | | | 17.1 | % |
| 17.1 | % |
| | | | | | | | | | | | | | |
Net income as reported | | $ | 129,343 | | $ | 109,225 |
| | $ | 388,605 | | $ | 363,078 | |
Special items: | |
|
| |
|
|
| | |
| |
|
| |
Rationalization and asset impairment charges (2) | |
| 7,074 | |
| 8,364 |
| | | 10,618 | |
| 9,405 | |
Acquisition transaction costs (3) | |
| — | |
| 3,068 |
| | | — | |
| 3,068 | |
Pension settlement net gains (5) | |
| — | |
| — |
| | | — | |
| (4,273) | |
Amortization of step up in value of acquired inventories (4) | |
| 4,852 | |
| (353) |
| | | 12,252 | |
| 1,106 | |
Gain on asset disposal (6) | |
| — | |
| — |
| | | (1,646) | |
| — | |
Tax effect of Special items (7) | |
| (1,780) | |
| (731) |
| | | (3,908) | |
| 58 | |
Adjusted net income (1) | |
| 139,489 | |
| 119,573 |
| | | 405,921 | |
| 372,442 | |
Interest expense, net | |
| 10,809 | |
| 8,210 |
| | | 35,708 | |
| 20,867 | |
Income taxes as reported | |
| 32,090 | |
| 28,262 |
| | | 101,232 | |
| 93,991 | |
Tax effect of Special items (7) | |
| 1,780 | |
| 731 |
| | | 3,908 | |
| (58) | |
Adjusted EBIT (1) | | $ | 184,168 | | $ | 156,776 |
| | $ | 546,769 | | $ | 487,242 | |
| | | | | | | | | | | | | | |
Effective tax rate as reported | |
| 19.9 | % |
| 20.6 | % | | | 20.7 | % |
| 20.6 | % |
Net special item tax impact | |
| (0.4) | % |
| (1.1) | % | | | (0.1) | % |
| (0.5) | % |
Adjusted effective tax rate (1) | |
| 19.5 | % |
| 19.5 | % | | | 20.6 | % |
| 20.1 | % |
| | | | | | | | | | | | | | |
Diluted earnings per share as reported | | $ | 2.22 | | $ | 1.87 |
| | $ | 6.67 | | $ | 6.17 | |
Special items per share | |
| 0.18 | |
| 0.17 |
| | | 0.30 | |
| 0.16 | |
Adjusted diluted earnings per share (1) | | $ | 2.40 | | $ | 2.04 |
| | $ | 6.97 | | $ | 6.33 | |
| | | | | | | | | | | | | | |
Weighted average shares (diluted) | |
| 58,136 | |
| 58,526 |
| | | 58,277 | |
| 58,815 | |
(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) | 2023 charges are primarily related to restructuring activities and impairments within International Welding. 2022 charges are primarily related to severance, gains or losses on the disposal of assets. |
(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) | Pension net gains primarily due to the final settlement associated with the termination of a pension plan and are included in Other income. |
(6) | Gain on asset disposal and included in Other income. |
(7) | 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 September 30, |
| ||||
Return on Invested Capital |
| 2023 |
| 2022 | | ||
Net income as reported | | $ | 497,751 | | $ | 437,505 | |
Plus: Interest expense (after-tax) | | | 36,283 | | | 20,732 | |
Less: Interest income (after-tax) | | | 3,104 | | | 1,019 | |
Net operating profit after taxes | | $ | 530,930 | | $ | 457,218 | |
Special Items: | | | | | | | |
Rationalization and asset impairment charges | |
| 13,001 | |
| 10,955 | |
Acquisition transaction costs | |
| 2,935 | |
| 3,068 | |
Pension settlement charges (2) | |
| — | |
| 42,131 | |
Amortization of step up in value of acquired inventories | |
| 12,253 | |
| 1,379 | |
Gain on asset disposal | |
| (1,646) | |
| — | |
Tax effect of Special items (3) | |
| (5,159) | |
| (26,393) | |
Adjusted net operating profit after taxes (1) | | $ | 552,314 | | $ | 488,358 | |
| | | | | | | |
Invested Capital | | September 30, 2023 | | September 30, 2022 | | ||
Short-term debt | | $ | 7,700 | | $ | 68,375 | |
Long-term debt, less current portion | |
| 1,102,858 | |
| 711,250 | |
Total debt | |
| 1,110,558 | |
| 779,625 | |
Total equity | |
| 1,225,582 | |
| 924,228 | |
Invested capital | | $ | 2,336,140 | | $ | 1,703,853 | |
| | | | | | | |
Return on invested capital as reported | | | 22.7 | % | | 26.8 | % |
Adjusted return on invested capital (1) | |
| 23.6 | % |
| 28.7 | % |
(1) | Adjusted net operating profit after taxes and adjusted ROIC are non-GAAP financial measures. Refer to Non-GAAP Information section. |
(2) | Related to lump sum pension payments due to the final settlement associated with the termination of a pension plan. |
(3) | 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 September 30, | ||||
| 2023 | | 2022 | ||
OPERATING ACTIVITIES: | |
|
| |
|
Net income | $ | 129,343 | | $ | 109,225 |
Adjustments to reconcile Net income to Net cash provided by operating activities: |
|
| |
|
|
Rationalization and asset impairment net charges |
| (6) | |
| 7,889 |
Depreciation and amortization |
| 21,489 | |
| 19,250 |
Equity (earnings) loss in affiliates, net |
| (169) | |
| 434 |
Other non-cash items, net |
| 210 | |
| (1,409) |
Changes in operating assets and liabilities, net of effects from acquisitions: |
|
| |
|
|
Decrease in accounts receivable |
| 25,585 | |
| 39,390 |
Decrease (Increase) in inventories |
| 51,514 | |
| (22,984) |
Decrease in trade accounts payable |
| (26,238) | |
| (24,680) |
Net change in other current assets and liabilities |
| 27,772 | |
| 11,296 |
Net change in other long-term assets and liabilities |
| (6,396) | |
| (8,128) |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
| 223,104 | |
| 130,283 |
| | | | | |
INVESTING ACTIVITIES: |
|
| |
|
|
Capital expenditures |
| (25,907) | |
| (17,699) |
Acquisition of businesses, net of cash acquired |
| (28) | |
| (199) |
Proceeds from sale of property, plant and equipment | | 704 | |
| 646 |
Purchase of marketable securities | | 468 | |
| — |
NET CASH USED BY INVESTING ACTIVITIES |
| (24,763) | |
| (17,252) |
| | | | | |
FINANCING ACTIVITIES: |
|
| |
|
|
Payments on short-term borrowings |
| (2,594) | |
| (55,561) |
Payments on long-term borrowings | | (1,019) | | | (1,269) |
Proceeds from exercise of stock options |
| 1,289 | |
| 751 |
Purchase of shares for treasury |
| (45,355) | |
| (26,518) |
Cash dividends paid to shareholders |
| (36,805) | |
| (32,463) |
NET CASH USED BY FINANCING ACTIVITIES |
| (84,484) | |
| (115,060) |
| | | | | |
Effect of exchange rate changes on Cash and cash equivalents |
| 8,327 | |
| (9,460) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
| 122,184 | |
| (11,489) |
Cash and cash equivalents at beginning of period |
| 220,483 | |
| 152,796 |
Cash and cash equivalents at end of period | $ | 342,667 | | $ | 141,307 |
| | | | | |
Cash dividends paid per share | $ | 0.64 | | $ | 0.56 |
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
|
| Nine Months Ended September 30, | ||||
| | 2023 | | 2022 | ||
OPERATING ACTIVITIES: |
| |
|
| |
|
Net income | | $ | 388,605 | | $ | 363,078 |
Adjustments to reconcile Net income to Net cash provided by operating activities: | |
|
| |
|
|
Rationalization and asset impairment net charges | |
| 1,128 | |
| 7,776 |
Depreciation and amortization | |
| 64,701 | |
| 59,009 |
Equity (earnings) loss in affiliates, net | |
| (463) | |
| 254 |
Other non-cash items, net | |
| 21,890 | |
| 2,413 |
Changes in operating assets and liabilities, net of effects from acquisitions: | |
|
| |
|
|
Decrease (Increase) in accounts receivable | |
| 6,695 | |
| (64,569) |
Decrease (Increase) in inventories | |
| 57,781 | |
| (135,578) |
(Decrease) Increase in trade accounts payable | |
| (24,672) | |
| 19,572 |
Net change in other current assets and liabilities | |
| 43,246 | |
| 32,470 |
Net change in other long-term assets and liabilities | |
| (13,031) | |
| (12,841) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | |
| 545,880 | |
| 271,584 |
| | | | | | |
INVESTING ACTIVITIES: | |
|
| |
|
|
Capital expenditures | |
| (66,459) | |
| (52,301) |
Acquisition of businesses, net of cash acquired | |
| (32,685) | |
| (22,294) |
Proceeds from sale of property, plant and equipment | |
| 4,596 | |
| 2,338 |
Purchase of marketable securities | |
| (6,561) | |
| — |
NET CASH USED BY INVESTING ACTIVITIES | |
| (101,109) | |
| (72,257) |
| | | | | | |
FINANCING ACTIVITIES: | |
|
| |
|
|
(Payments on) proceeds from short-term borrowings | |
| (74,818) | |
| 9,399 |
(Payments on) proceeds from long-term borrowings | | | (7,997) | | | 5,600 |
Proceeds from exercise of stock options | |
| 13,299 | |
| 2,168 |
Purchase of shares for treasury | |
| (130,589) | |
| (156,216) |
Cash dividends paid to shareholders | |
| (111,277) | |
| (98,377) |
NET CASH USED BY FINANCING ACTIVITIES | |
| (311,382) | |
| (237,426) |
| | | | | | |
Effect of exchange rate changes on Cash and cash equivalents | |
| 12,128 | |
| (13,552) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | |
| 145,517 | |
| (51,651) |
Cash and cash equivalents at beginning of period | |
| 197,150 | |
| 192,958 |
Cash and cash equivalents at end of period | | $ | 342,667 | | $ | 141,307 |
| | | | | | |
Cash dividends paid per share | | $ | 1.92 | | $ | 1.68 |
Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)
|
| Americas |
| International |
| The Harris |
| Corporate / |
| | |
| ||||
| | Welding | | Welding | | Products Group | | Eliminations | | Consolidated |
| |||||
Three months ended September 30, 2023 |
| |
|
| |
|
| |
|
| |
|
| |
| |
Net sales | | $ | 665,228 | | $ | 242,010 | | $ | 125,976 | | $ | — | | $ | 1,033,214 | |
Inter-segment sales | |
| 28,875 | |
| 4,896 | |
| 2,299 | |
| (36,070) | |
| — | |
Total sales | | $ | 694,103 | | $ | 246,906 | | $ | 128,275 | | $ | (36,070) | | $ | 1,033,214 | |
| | | | | | | | | | | | | | | | |
Net income | | | | | |
| | |
| | |
| | $ | 129,343 | |
As a percent of total sales | |
| | |
|
| |
|
| |
|
| |
| 12.5 | % |
| | | | | | | | | | | | | | | | |
EBIT (1) | | $ | 132,420 | | $ | 22,369 | | $ | 20,405 | | $ | (2,952) | | $ | 172,242 | |
As a percent of total sales | |
| 19.1 | % |
| 9.1 | % |
| 15.9 | % |
| | |
| 16.7 | % |
Special items charges (3) | |
| 4,056 | |
| 7,870 | |
| — | |
| — | |
| 11,926 | |
Adjusted EBIT (2) | | $ | 136,476 | | $ | 30,239 | | $ | 20,405 | | $ | (2,952) | | $ | 184,168 | |
As a percent of total sales | |
| 19.7 | % |
| 12.2 | % |
| 15.9 | % |
| | |
| 17.8 | % |
| | | | | | | | | | | | | | | | |
Three months ended September 30, 2022 | |
|
| |
|
| |
|
| |
|
| |
|
| |
Net sales | | $ | 585,628 | | $ | 216,497 | | $ | 133,115 | | $ | — | | $ | 935,240 | |
Inter-segment sales | |
| 35,353 | |
| 9,994 | |
| 2,642 | |
| (47,989) | |
| — | |
Total sales | | $ | 620,981 | | $ | 226,491 | | $ | 135,757 | | $ | (47,989) | | $ | 935,240 | |
| | | | | | | | | | | | | | | | |
Net income | | | | | |
| | |
| | |
| | $ | 109,225 | |
As a percent of total sales | |
| | |
|
| |
|
| |
|
| |
| 11.7 | % |
| | | | | | | | | | | | | | | | |
EBIT (1) | | $ | 119,157 | | $ | 16,861 | | $ | 14,432 | | $ | (4,753) | | $ | 145,697 | |
As a percent of total sales | |
| 19.2 | % |
| 7.4 | % |
| 10.6 | % |
| | |
| 15.6 | % |
Special items charges (4) | |
| (353) | |
| 8,364 | |
| — | |
| 3,068 | |
| 11,079 | |
Adjusted EBIT (2) | | $ | 118,804 | | $ | 25,225 | | $ | 14,432 | | $ | (1,685) | | $ | 156,776 | |
As a percent of total sales | |
| 19.1 | % |
| 11.1 | % |
| 10.6 | % |
| | |
| 16.8 | % |
(1) | EBIT is defined as Operating income plus Other income (expense). |
(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 2023 primarily reflect amortization of step up in value of acquired inventories of $3,648 and $1,204 in Americas and International Welding, respectively, and Rationalization and asset impairment net charges of $408 and $6,666 in Americas and International Welding, respectively. |
(4) | Special items in 2022 primarily reflect an adjustment to the amortization of step up in value of acquired inventories of $353 in Americas Welding related to an acquisition, Rationalization and asset impairment charges of 8,364 in International Welding and acquisition transaction costs of $3,068 in Corporate/Eliminations related to an acquisition. |
Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)
|
| Americas |
| International |
| The Harris |
| Corporate / |
| | |
| ||||
| | Welding | | Welding | | Products Group | | Eliminations | | Consolidated |
| |||||
Nine months ended September 30, 2023 |
| |
|
| |
|
| |
|
| |
|
| |
| |
Net sales | | $ | 2,000,839 | | $ | 747,829 | | $ | 384,454 | | $ | — | | $ | 3,133,122 | |
Inter-segment sales | |
| 92,043 | |
| 19,941 | |
| 8,063 | |
| (120,047) | |
| — | |
Total sales | | $ | 2,092,882 | | $ | 767,770 | | $ | 392,517 | | $ | (120,047) | | $ | 3,133,122 | |
| | | | | | | | | | | | | | | | |
Net income | | | | |
|
| |
|
| |
|
| | $ | 388,605 | |
As a percent of total sales | |
| | |
|
| |
|
| |
|
| |
| 12.4 | % |
| | | | | | | | | | | | | | | | |
EBIT (1) | | $ | 399,002 | | $ | 82,183 | | $ | 58,898 | | $ | (14,538) | | $ | 525,545 | |
As a percent of total sales | |
| 19.1 | % |
| 10.7 | % |
| 15.0 | % |
| | |
| 16.8 | % |
Special items charges (3) | |
| 9,798 | |
| 11,426 | |
| — | |
| — | |
| 21,224 | |
Adjusted EBIT (2) | | $ | 408,800 | | $ | 93,609 | | $ | 58,898 | | $ | (14,538) | | $ | 546,769 | |
As a percent of total sales | |
| 19.5 | % |
| 12.2 | % |
| 15.0 | % |
| | |
| 17.5 | % |
| | | | | | | | | | | | | | | | |
Nine months ended September 30, 2022 | |
|
| |
|
| |
|
| |
|
| |
|
| |
Net sales | | $ | 1,715,342 | | $ | 711,167 | | $ | 403,768 | | $ | — | | $ | 2,830,277 | |
Inter-segment sales | |
| 92,540 | |
| 25,749 | |
| 8,570 | |
| (126,859) | |
| — | |
Total sales | | $ | 1,807,882 | | $ | 736,916 | | $ | 412,338 | | $ | (126,859) | | $ | 2,830,277 | |
| | | | | | | | | | | | | | | | |
Net income | | | | |
|
| |
|
| |
|
| | $ | 363,078 | |
As a percent of total sales | |
| | |
|
| |
|
| |
|
| |
| 12.8 | % |
| | | | | | | | | | | | | | | | |
EBIT (1) | | $ | 352,066 | | $ | 87,456 | | $ | 51,952 | | $ | (13,538) | | $ | 477,936 | |
As a percent of total sales | |
| 19.5 | % |
| 11.9 | % |
| 12.6 | % |
| | |
| 16.9 | % |
Special items charges (4) | |
| (3,627) | |
| 9,865 | |
| — | |
| 3,068 | |
| 9,306 | |
Adjusted EBIT (2) | | $ | 348,439 | | $ | 97,321 | | $ | 51,952 | | $ | (10,470) | | $ | 487,242 | |
As a percent of total sales | |
| 19.3 | % |
| 13.2 | % |
| 12.6 | % |
| | |
| 17.2 | % |
(1) | EBIT is defined as Operating income plus Other income (expense). |
(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 2023 primarily reflect amortization of step up in value of acquired inventories of $9,390 and $2,862 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $408 and $10,210 in Americas and International Welding, respectively, and a gain on asset disposal of $1,646 in International Welding. |
(4) | Special items in 2022 primarily reflect amortization of step up in value of acquired inventories of $1,106 in Americas Welding related to an acquisition, acquisition transaction costs of $3,068 in Corporate/Eliminations related to an acquisition, and a $3,735 net gain related to the final settlement associated with the termination of a pension plan in Americas Welding. Special items in 2022 also include Rationalization and asset impairment charges of $10,403 in International Welding and net gains of $998 in Americas Welding. |
Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)
Three Months Ended September 30th Change in Net Sales by Segment
| | |
| Change in Net Sales due to: |
|
| |
| ||||||||||
| Net Sales | | | | | | | | | | | Foreign | | Net Sales |
| |||
| 2022 | | Volume | | Acquisitions | | Price | | Exchange | | 2023 |
| ||||||
Operating Segments | |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
Americas Welding | $ | 585,628 | | $ | 2,072 |
| $ | 72,159 |
| $ | 3,488 |
| $ | 1,881 | | $ | 665,228 | |
International Welding | | 216,497 | |
| 6,296 |
| | 10,564 |
| | 477 |
| | 8,176 | |
| 242,010 | |
The Harris Products Group | | 133,115 | |
| (14,919) |
| | — |
| | 6,231 |
| | 1,549 | |
| 125,976 | |
Consolidated | $ | 935,240 | | $ | (6,551) |
| $ | 82,723 |
| $ | 10,196 |
| $ | 11,606 | | $ | 1,033,214 | |
| | | | | | | | | | | | | | | | | | |
% Change | |
| |
|
|
| |
|
| |
|
| |
| |
|
| |
Americas Welding | | | |
| 0.4 | % | | 12.3 | % | | 0.6 | % | | 0.3 | % |
| 13.6 | % |
International Welding | | | |
| 2.9 | % | | 4.9 | % | | 0.2 | % | | 3.8 | % |
| 11.8 | % |
The Harris Products Group | | | |
| (11.2) | % | | — | | | 4.7 | % | | 1.2 | % |
| (5.4) | % |
Consolidated | | | |
| (0.7) | % | | 8.8 | % | | 1.1 | % | | 1.2 | % |
| 10.5 | % |
Nine Months Ended September 30th Change in Net Sales by Segment
|
| | |
| Change in Net Sales due to: |
| |
|
| ||||||||||
| | Net Sales | | | | | | | | | | | Foreign | | Net Sales |
| |||
| | 2022 | | Volume | | Acquisitions | | Price | | Exchange | | 2023 |
| ||||||
Operating Segments |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
Americas Welding |
| $ | 1,715,342 |
| $ | 95,106 | | $ | 161,355 | | $ | 34,161 | | $ | (5,125) |
| $ | 2,000,839 | |
International Welding |
| | 711,167 |
| | 645 | | | 23,929 | | | 16,345 | | | (4,257) |
| | 747,829 | |
The Harris Products Group |
| | 403,768 |
| | (28,789) | | | — | | | 8,204 | | | 1,271 |
| | 384,454 | |
Consolidated |
| $ | 2,830,277 |
| $ | 66,962 |
| $ | 185,284 |
| $ | 58,710 |
| $ | (8,111) |
| $ | 3,133,122 | |
| | | | | | | | | | | | | | | | | | | |
% Change |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
Americas Welding | | | |
| | 5.5 | % | | 9.4 | % | | 2.0 | % | | (0.3) | % | | 16.6 | % |
International Welding |
| | |
| | 0.1 | % | | 3.4 | % | | 2.3 | % | | (0.6) | % | | 5.2 | % |
The Harris Products Group |
| | | | | (7.1) | % | | — | | | 2.0 | % | | 0.3 | % | | (4.8) | % |
Consolidated |
| | |
| | 2.4 | % | | 6.5 | % | | 2.1 | % | | (0.3) | % | | 10.7 | % |