Adjusted EPS increases 9% to $0.94
CLEVELAND, Oct. 30, 2014 /PRNewswire/ --
|
Third Quarter 2014 Highlights |
|
Lincoln Electric Holdings, Inc. (the "Company") LECO today reported third quarter 2014 net income of $45.7 million, or $0.57 per diluted share, which includes rationalization and asset impairment charges of $29.1 million. This compares with net income of $66.0 million, or $0.80 per diluted share, in the comparable 2013 period. Adjusted net income was $74.9 million, or $0.94 per diluted share, compared to adjusted net income of $71.1 million, or $0.86 per diluted share, in the comparable 2013 period.
Sales increased 3.5% to $715.8 million in the third quarter 2014 versus $691.9 million in the comparable 2013 period. Operating income for the third quarter decreased 20.0% to $76.1 million, or 10.6% of sales, from $95.2 million, or 13.8% of sales, in the comparable 2013 period. Adjusted operating income increased 3.7% to $105.2 million or 14.7% of sales, compared with $101.5 million, or 14.7% of sales in 2013.
Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.1 million. These non-cash asset impairment charges primarily related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $3.4 million primarily representing a gain on the sale of real estate. These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.
Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased with the underlying quality of our earnings this quarter, which were driven by strong top-line growth and margin contributions from our North America Welding and Europe Welding segments. This performance more than offset a challenging year-over-year comparison from our Venezuela business. Looking ahead, improving end market trends and demand for our innovative solutions combined with benefits from our strategic initiatives and accelerated returns, position us well to continue to deliver value to all of our stakeholders."
Dividend and Share Repurchases
The Company's Board of Directors declared a 26% increase in the quarterly cash dividend, from $0.23 per share to $0.29, or to $1.16 per share on an annualized basis. The declared quarterly cash dividend of $0.29 per share is payable January 15, 2015 to shareholders of record as of December 31, 2014.
During the quarter, the Company returned $130.1 million to shareholders through the repurchase of 1,867,204 of the Company's common shares. The Company has now increased its 2014 share repurchase target to $300 million of the Company's common shares.
Nine Months 2014 Summary
Net income for the nine months ended September 30, 2014 was $179.5 million, or $2.22 per diluted share, which includes rationalization and asset impairment charges of $29.9 million and charges of $21.1 million from Venezuelan foreign exchange remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. This compares with net income of $205.5 million, or $2.47 per diluted share, in 2013. Adjusted net income was $230.5 million, or $2.86 per diluted share, compared to adjusted net income of $224.0 million, or $2.69 per diluted share, in 2013. Adjusted net income for the nine months ended September 30, 2014 includes earnings of $0.17 per diluted share from the Company's Venezuelan operations as compared to $0.24 per diluted share in the comparable 2013 period.
Sales remained relatively steady at $2.1 billion in the nine months ended September 30, 2014 and the comparable 2013 period. This result reflects lower volumes and unfavorable foreign exchange translation being offset by pricing actions and acquisitions. Operating income for the nine months ended September 30, 2014 decreased to $268.8 million, or 12.6% of sales, compared to $288.1 million, or 13.5% of sales, in the comparable 2013 period. Adjusted operating income increased 3.7% to $319.9 million or 15.0% of sales, compared with $308.5 million, or 14.4% of sales in 2013. Operating income and Adjusted operating income include a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.
Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.9 million. Charges consist of non-cash asset impairment charges related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $2.5 million primarily representing a gain on the sale of real estate. These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.
Webcast Information
A conference call to discuss third quarter 2014 financial results will be webcast live today, Thursday, October 30, 2014, at 10:00 a.m., Eastern Time. This webcast is accessible at http://ir.lincolnelectric.com. Listeners should go to the web site prior to the call to register and download and install any necessary audio software. A replay of the webcast will be available on the Company's web site.
Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 17603361. Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.
Financial results for the third quarter 2014 can also be obtained at http://ir.lincolnelectric.com.
About Lincoln Electric
Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 48 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric and its products and services, visit the Company's website at http://www.lincolnelectric.com.
Non-GAAP Information
Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company's financial performance from period to period. Management uses this information in assessing and evaluating the Company's underlying operating performance. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures.
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 and market conditions; the effectiveness of 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, including in highly inflationary countries such as Venezuela; adverse outcome of pending or potential litigation; actual costs of the Company's rationalization plans; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, 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.
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Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited)
| |||||||||||||||||||||
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Consolidated Statements of Income |
|||||||||||||||||||||
|
Three months ended September 30, |
Fav (Unfav) to Prior Year | ||||||||||||||||||||
|
2014 |
% of Sales |
2013 |
% of Sales |
$ |
% | ||||||||||||||||
|
Net sales |
$ |
715,777 |
100.0 |
% |
$ |
691,875 |
100.0 |
% |
$ |
23,902 |
3.5 |
% | |||||||||
|
Cost of goods sold |
474,168 |
66.2 |
% |
459,178 |
66.4 |
% |
(14,990) |
(3.3) |
% | ||||||||||||
|
Gross profit |
241,609 |
33.8 |
% |
232,697 |
33.6 |
% |
8,912 |
3.8 |
% | ||||||||||||
|
Selling, general & administrative expenses |
136,424 |
19.1 |
% |
131,217 |
19.0 |
% |
(5,207) |
(4.0) |
% | ||||||||||||
|
Rationalization and asset impairment charges |
29,068 |
4.1 |
% |
6,302 |
0.9 |
% |
(22,766) |
(361.3) |
% | ||||||||||||
|
Operating income |
76,117 |
10.6 |
% |
95,178 |
13.8 |
% |
(19,061) |
(20.0) |
% | ||||||||||||
|
Interest income |
627 |
0.1 |
% |
536 |
0.1 |
% |
91 |
17.0 |
% | ||||||||||||
|
Equity earnings in affiliates |
1,172 |
0.2 |
% |
1,170 |
0.2 |
% |
2 |
0.2 |
% | ||||||||||||
|
Other income |
1,043 |
0.1 |
% |
1,514 |
0.2 |
% |
(471) |
(31.1) |
% | ||||||||||||
|
Interest expense |
(1,174) |
(0.2) |
% |
(558) |
(0.1) |
% |
(616) |
(110.4) |
% | ||||||||||||
|
Income before income taxes |
77,785 |
10.9 |
% |
97,840 |
14.1 |
% |
(20,055) |
(20.5) |
% | ||||||||||||
|
Income taxes |
32,953 |
4.6 |
% |
33,588 |
4.9 |
% |
635 |
1.9 |
% | ||||||||||||
|
Effective tax rate |
42.4 |
% |
34.3 |
% |
(8.1) |
% |
|||||||||||||||
|
Net income including non-controlling interests |
44,832 |
6.3 |
% |
64,252 |
9.3 |
% |
(19,420) |
(30.2) |
% | ||||||||||||
|
Non-controlling interests in subsidiaries' loss |
(857) |
(0.1) |
% |
(1,792) |
(0.3) |
% |
935 |
52.2 |
% | ||||||||||||
|
Net income |
$ |
45,689 |
6.4 |
% |
$ |
66,044 |
9.5 |
% |
$ |
(20,355) |
(30.8) |
% | |||||||||
|
Basic earnings per share |
$ |
0.58 |
$ |
0.81 |
$ |
(0.23) |
(28.4) |
% | |||||||||||||
|
Diluted earnings per share |
$ |
0.57 |
$ |
0.80 |
$ |
(0.23) |
(28.8) |
% | |||||||||||||
|
Weighted average shares (basic) |
78,817 |
81,644 |
|||||||||||||||||||
|
Weighted average shares (diluted) |
79,725 |
82,707 |
|||||||||||||||||||
|
Nine months ended September 30, |
Fav (Unfav) to Prior Year | ||||||||||||||||||||
|
2014 |
% of Sales |
2013 |
% of Sales |
$ |
% | ||||||||||||||||
|
Net sales |
$ |
2,129,370 |
100.0 |
% |
$ |
2,137,880 |
100.0 |
% |
$ |
(8,510) |
(0.4) |
% | |||||||||
|
Cost of goods sold |
1,411,158 |
66.3 |
% |
1,438,273 |
67.3 |
% |
27,115 |
1.9 |
% | ||||||||||||
|
Gross profit |
718,212 |
33.7 |
% |
699,607 |
32.7 |
% |
18,605 |
2.7 |
% | ||||||||||||
|
Selling, general & administrative expenses |
419,495 |
19.7 |
% |
403,323 |
18.9 |
% |
(16,172) |
(4.0) |
% | ||||||||||||
|
Rationalization and asset impairment charges |
29,887 |
1.4 |
% |
8,204 |
0.4 |
% |
(21,683) |
(264.3) |
% | ||||||||||||
|
Operating income |
268,830 |
12.6 |
% |
288,080 |
13.5 |
% |
(19,250) |
(6.7) |
% | ||||||||||||
|
Interest income |
2,465 |
0.1 |
% |
2,452 |
0.1 |
% |
13 |
0.5 |
% | ||||||||||||
|
Equity earnings in affiliates |
4,308 |
0.2 |
% |
3,687 |
0.2 |
% |
621 |
16.8 |
% | ||||||||||||
|
Other income |
3,204 |
0.2 |
% |
3,141 |
0.1 |
% |
63 |
2.0 |
% | ||||||||||||
|
Interest expense |
(3,730) |
(0.2) |
% |
(2,307) |
(0.1) |
% |
(1,423) |
(61.7) |
% | ||||||||||||
|
Income before income taxes |
275,077 |
12.9 |
% |
295,053 |
13.8 |
% |
(19,976) |
(6.8) |
% | ||||||||||||
|
Income taxes |
96,532 |
4.5 |
% |
91,431 |
4.3 |
% |
(5,101) |
(5.6) |
% | ||||||||||||
|
Effective tax rate |
35.1 |
% |
31.0 |
% |
(4.1) |
% |
|||||||||||||||
|
Net income including non-controlling interests |
178,545 |
8.4 |
% |
203,622 |
9.5 |
% |
(25,077) |
(12.3) |
% | ||||||||||||
|
Non-controlling interests in subsidiaries' loss |
(929) |
— |
(1,834) |
(0.1) |
% |
905 |
49.3 |
% | |||||||||||||
|
Net income |
$ |
179,474 |
8.4 |
% |
$ |
205,456 |
9.6 |
% |
$ |
(25,982) |
(12.6) |
% | |||||||||
|
Basic earnings per share |
$ |
2.25 |
$ |
2.50 |
$ |
(0.25) |
(10.0) |
% | |||||||||||||
|
Diluted earnings per share |
$ |
2.22 |
$ |
2.47 |
$ |
(0.25) |
(10.1) |
% | |||||||||||||
|
Weighted average shares (basic) |
79,779 |
82,260 |
|||||||||||||||||||
|
Weighted average shares (diluted) |
80,702 |
83,314 |
|||||||||||||||||||
|
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, |
|||||||||||||||
|
2014 |
2013 |
2014 |
2013 |
|||||||||||||
|
Operating income as reported |
$ |
76,117 |
$ |
95,178 |
$ |
268,830 |
$ |
288,080 |
||||||||
|
Special items (pre-tax): |
||||||||||||||||
|
Rationalization and asset impairment charges (1) |
29,068 |
6,302 |
29,887 |
8,204 |
||||||||||||
|
Venezuela foreign exchange losses (2) |
— |
— |
21,133 |
12,198 |
||||||||||||
|
Adjusted operating income (4) |
$ |
105,185 |
$ |
101,480 |
$ |
319,850 |
$ |
308,482 |
||||||||
|
Net income as reported |
$ |
45,689 |
$ |
66,044 |
$ |
179,474 |
$ |
205,456 |
||||||||
|
Special items (after-tax): |
||||||||||||||||
|
Rationalization and asset impairment charges (1) |
30,056 |
6,098 |
30,747 |
7,350 |
||||||||||||
|
Venezuela foreign exchange losses (2) |
— |
— |
21,133 |
12,198 |
||||||||||||
|
Special items attributable to non-controlling interests (3) |
(805) |
(1,021) |
(805) |
(1,021) |
||||||||||||
|
Adjusted net income (4) |
$ |
74,940 |
$ |
71,121 |
$ |
230,549 |
$ |
223,983 |
||||||||
|
Diluted earnings per share as reported |
$ |
0.57 |
$ |
0.80 |
$ |
2.22 |
$ |
2.47 |
||||||||
|
Special items |
0.37 |
0.06 |
0.64 |
0.22 |
||||||||||||
|
Adjusted diluted earnings per share (4) |
$ |
0.94 |
$ |
0.86 |
$ |
2.86 |
$ |
2.69 |
||||||||
|
Weighted average shares (diluted) |
79,725 |
82,707 |
80,702 |
83,314 |
||||||||||||
|
(1) |
The three and nine months ended September 30, 2014 include a non-cash asset impairment charge of $32.4 million partially offset by net rationalization gains including a gain on the sale of real estate. The three and nine months ended September 30, 2013 include net charges associated with long-lived asset impairments and severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets at rationalized operations. |
|
(2) |
The nine months ended September 30, 2014 represents the impact of the Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism in the first quarter. The nine months ended September 30, 2013 represents the impact of the devaluation of the Venezuelan currency. |
|
(3) |
Represents the portion of special items attributable to non-controlling interests. |
|
(4) |
Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company's financial performance from period to period. Management uses this information in assessing and evaluating the Company's underlying operating performance. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. |
|
Lincoln Electric Holdings, Inc. Financial Highlights (In thousands) (Unaudited)
| ||||||||
|
Balance Sheet Highlights | ||||||||
|
Selected Consolidated Balance Sheet Data |
September 30, 2014 |
December 31, 2013 | ||||||
|
Cash and cash equivalents |
$ |
279,523 |
$ |
299,825 |
||||
|
Total current assets |
1,209,836 |
1,130,775 |
||||||
|
Property, plant and equipment, net |
450,016 |
484,005 |
||||||
|
Total assets |
2,112,519 |
2,151,867 |
||||||
|
Total current liabilities |
571,701 |
456,917 |
||||||
|
Short-term debt (1) |
87,501 |
15,296 |
||||||
|
Long-term debt |
1,041 |
3,791 |
||||||
|
Total equity |
1,376,479 |
1,530,688 |
||||||
|
Net Operating Working Capital |
September 30, 2014 |
December 31, 2013 | ||||||
|
Accounts receivable |
$ |
354,376 |
$ |
367,134 |
||||
|
Inventory |
337,197 |
349,963 |
||||||
|
Trade accounts payable |
186,751 |
212,799 |
||||||
|
Net operating working capital |
$ |
504,822 |
$ |
504,298 |
||||
|
Net operating working capital to net sales (2) |
17.6 |
% |
17.6 |
% | ||||
|
Invested Capital |
September 30, 2014 |
December 31, 2013 | ||||||
|
Short-term debt (1) |
$ |
87,501 |
$ |
15,296 |
||||
|
Long-term debt |
1,041 |
3,791 |
||||||
|
Total debt |
88,542 |
19,087 |
||||||
|
Total equity |
1,376,479 |
1,530,688 |
||||||
|
Invested capital |
$ |
1,465,021 |
$ |
1,549,775 |
||||
|
Total debt / invested capital |
6.0 |
% |
1.2 |
% | ||||
|
Return on invested capital (3) |
18.3 |
% |
18.9 |
% | ||||
|
(1) |
Includes current portion of long-term debt. |
|
(2) |
Net operating working capital to net sales is defined as net operating working capital divided by annualized rolling three months of sales. |
|
(3) |
Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest divided by invested capital. |
|
Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited)
|
||||||||
|
Condensed Consolidated Statements of Cash Flows |
||||||||
|
Three months ended September 30, |
||||||||
|
2014 |
2013 |
|||||||
|
OPERATING ACTIVITIES: |
||||||||
|
Net income |
$ |
45,689 |
$ |
66,044 |
||||
|
Non-controlling interests in subsidiaries' loss |
(857) |
(1,792) |
||||||
|
Net income including non-controlling interests |
44,832 |
64,252 |
||||||
|
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: |
||||||||
|
Rationalization and asset impairment charges |
28,588 |
4,695 |
||||||
|
Depreciation and amortization |
17,117 |
17,326 |
||||||
|
Equity earnings in affiliates, net |
(404) |
(431) |
||||||
|
Pension expense |
4,158 |
7,326 |
||||||
|
Pension contributions and payments |
(10,479) |
(3,066) |
||||||
|
Other non-cash items, net |
9,382 |
5,421 |
||||||
|
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
|
Decrease in accounts receivable |
20,953 |
25,385 |
||||||
|
Decrease in inventories |
6,302 |
2,419 |
||||||
|
Increase (decrease) in trade accounts payable |
3,915 |
(20,863) |
||||||
|
Net change in other current assets and liabilities |
25,919 |
50,006 |
||||||
|
Net change in other long-term assets and liabilities |
(835) |
2,570 |
||||||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
149,448 |
155,040 |
||||||
|
INVESTING ACTIVITIES: |
||||||||
|
Capital expenditures |
(15,483) |
(28,643) |
||||||
|
Acquisition of businesses, net of cash acquired |
— |
(260) |
||||||
|
Proceeds from sale of property, plant and equipment |
11,537 |
204 |
||||||
|
NET CASH USED BY INVESTING ACTIVITIES |
(3,946) |
(28,699) |
||||||
|
FINANCING ACTIVITIES: |
||||||||
|
Net change in borrowings |
81,257 |
404 |
||||||
|
Proceeds from exercise of stock options |
1,935 |
2,873 |
||||||
|
Excess tax benefits from stock-based compensation |
883 |
1,508 |
||||||
|
Purchase of shares for treasury |
(130,070) |
(43,964) |
||||||
|
Cash dividends paid to shareholders |
(18,276) |
(16,407) |
||||||
|
NET CASH USED BY FINANCING ACTIVITIES |
(64,271) |
(55,586) |
||||||
|
Effect of exchange rate changes on Cash and cash equivalents |
(5,993) |
3,165 |
||||||
|
INCREASE IN CASH AND CASH EQUIVALENTS |
75,238 |
73,920 |
||||||
|
Cash and cash equivalents at beginning of period |
204,285 |
256,389 |
||||||
|
Cash and cash equivalents at end of period |
$ |
279,523 |
$ |
330,309 |
||||
|
Cash dividends paid per share |
$ |
0.23 |
$ |
0.20 |
||||
|
Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Condensed Consolidated Statements of Cash Flows
|
||||||||
|
Condensed Consolidated Statements of Cash Flows |
||||||||
|
Nine months ended September 30, |
||||||||
|
2014 |
2013 |
|||||||
|
OPERATING ACTIVITIES: |
||||||||
|
Net income |
$ |
179,474 |
$ |
205,456 |
||||
|
Non-controlling interests in subsidiaries' loss |
(929) |
(1,834) |
||||||
|
Net income including non-controlling interests |
178,545 |
203,622 |
||||||
|
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: |
||||||||
|
Rationalization and asset impairment charges |
29,447 |
5,049 |
||||||
|
Depreciation and amortization |
53,017 |
51,881 |
||||||
|
Equity earnings in affiliates, net |
(1,901) |
(1,313) |
||||||
|
Pension expense |
9,634 |
22,261 |
||||||
|
Pension contributions and payments |
(34,643) |
(84,417) |
||||||
|
Other non-cash items, net |
30,041 |
29,757 |
||||||
|
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
|
Increase in accounts receivable |
(22,388) |
(17,982) |
||||||
|
Increase in inventories |
(11,153) |
(9,889) |
||||||
|
Decrease in trade accounts payable |
(11,534) |
(32,703) |
||||||
|
Net change in other current assets and liabilities |
53,299 |
75,627 |
||||||
|
Net change in other long-term assets and liabilities |
(4,311) |
198 |
||||||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
268,053 |
242,091 |
||||||
|
INVESTING ACTIVITIES: |
||||||||
|
Capital expenditures |
(55,430) |
(59,691) |
||||||
|
Acquisition of businesses, net of cash acquired |
(892) |
(4,936) |
||||||
|
Proceeds from sale of property, plant and equipment |
17,046 |
796 |
||||||
|
Other investing activities |
778 |
(4,217) |
||||||
|
NET CASH USED BY INVESTING ACTIVITIES |
(38,498) |
(68,048) |
||||||
|
FINANCING ACTIVITIES: |
||||||||
|
Net change in borrowings |
71,114 |
(2,351) |
||||||
|
Proceeds from exercise of stock options |
5,945 |
16,077 |
||||||
|
Excess tax benefits from stock-based compensation |
3,361 |
6,973 |
||||||
|
Purchase of shares for treasury |
(249,403) |
(113,641) |
||||||
|
Cash dividends paid to shareholders |
(55,395) |
(32,987) |
||||||
|
Transactions with non-controlling interests |
(2,330) |
(2,809) |
||||||
|
NET CASH USED BY FINANCING ACTIVITIES |
(226,708) |
(128,738) |
||||||
|
Effect of exchange rate changes on Cash and cash equivalents |
(23,149) |
(1,460) |
||||||
|
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(20,302) |
43,845 |
||||||
|
Cash and cash equivalents at beginning of period |
299,825 |
286,464 |
||||||
|
Cash and cash equivalents at end of period |
$ |
279,523 |
$ |
330,309 |
||||
|
Cash dividends paid per share |
$ |
0.69 |
$ |
0.40 |
||||
|
Lincoln Electric Holdings, Inc. Segment Highlights (In thousands) (Unaudited)
| ||||||||||||||||||||||||||||
|
North America Welding |
Europe Welding |
Asia Pacific Welding |
South America Welding |
The Harris Products Group |
Corporate / Eliminations |
Consolidated | ||||||||||||||||||||||
|
Three months ended September 30, 2014 |
||||||||||||||||||||||||||||
|
Net sales |
$ |
439,621 |
$ |
107,507 |
$ |
57,404 |
$ |
32,862 |
$ |
78,383 |
$ |
— |
$ |
715,777 |
||||||||||||||
|
Inter-segment sales |
30,365 |
4,533 |
3,595 |
9 |
2,009 |
(40,511) |
— |
|||||||||||||||||||||
|
Total |
$ |
469,986 |
$ |
112,040 |
$ |
60,999 |
$ |
32,871 |
$ |
80,392 |
$ |
(40,511) |
$ |
715,777 |
||||||||||||||
|
EBIT (1) |
$ |
84,450 |
$ |
15,302 |
$ |
(28,871) |
$ |
(1,172) |
$ |
8,947 |
$ |
(324) |
$ |
78,332 |
||||||||||||||
|
As a percent of total sales |
18.0 |
% |
13.7 |
% |
(47.3) |
% |
(3.6) |
% |
11.1 |
% |
10.9 |
% | ||||||||||||||||
|
Special items (gain) charge (2) |
$ |
— |
$ |
(81) |
$ |
28,567 |
$ |
582 |
$ |
— |
$ |
— |
$ |
29,068 |
||||||||||||||
|
EBIT, as adjusted (4) |
$ |
84,450 |
$ |
15,221 |
$ |
(304) |
$ |
(590) |
$ |
8,947 |
$ |
(324) |
$ |
107,400 |
||||||||||||||
|
As a percent of total sales |
18.0 |
% |
13.6 |
% |
(0.5) |
% |
(1.8) |
% |
11.1 |
% |
15.0 |
% | ||||||||||||||||
|
Three months ended September 30, 2013 |
||||||||||||||||||||||||||||
|
Net sales |
$ |
404,113 |
$ |
98,522 |
$ |
63,834 |
$ |
51,715 |
$ |
73,691 |
$ |
— |
$ |
691,875 |
||||||||||||||
|
Inter-segment sales |
35,355 |
5,256 |
3,821 |
151 |
2,311 |
(46,894) |
— |
|||||||||||||||||||||
|
Total |
$ |
439,468 |
$ |
103,778 |
$ |
67,655 |
$ |
51,866 |
$ |
76,002 |
$ |
(46,894) |
$ |
691,875 |
||||||||||||||
|
EBIT (1) |
$ |
75,242 |
$ |
6,286 |
$ |
(5,703) |
$ |
15,942 |
$ |
6,917 |
$ |
(822) |
$ |
97,862 |
||||||||||||||
|
As a percent of total sales |
17.1 |
% |
6.1 |
% |
(8.4) |
% |
30.7 |
% |
9.1 |
% |
14.1 |
% | ||||||||||||||||
|
Special items (gain) charge (3) |
$ |
(17) |
$ |
1,595 |
$ |
4,724 |
$ |
— |
$ |
— |
$ |
— |
$ |
6,302 |
||||||||||||||
|
EBIT, as adjusted (4) |
$ |
75,225 |
$ |
7,881 |
$ |
(979) |
$ |
15,942 |
$ |
6,917 |
$ |
(822) |
$ |
104,164 |
||||||||||||||
|
As a percent of total sales |
17.1 |
% |
7.6 |
% |
(1.4) |
% |
30.7 |
% |
9.1 |
% |
15.1 |
% | ||||||||||||||||
|
Nine months ended September 30, 2014 |
||||||||||||||||||||||||||||
|
Net sales |
$ |
1,271,017 |
$ |
328,487 |
$ |
185,687 |
$ |
115,906 |
$ |
228,273 |
$ |
— |
$ |
2,129,370 |
||||||||||||||
|
Inter-segment sales |
96,668 |
15,887 |
11,644 |
73 |
6,389 |
(130,661) |
— |
|||||||||||||||||||||
|
Total |
$ |
1,367,685 |
$ |
344,374 |
$ |
197,331 |
$ |
115,979 |
$ |
234,662 |
$ |
(130,661) |
$ |
2,129,370 |
||||||||||||||
|
EBIT (1) |
$ |
247,077 |
$ |
38,489 |
$ |
(29,029) |
$ |
(5,545) |
$ |
22,183 |
$ |
3,167 |
$ |
276,342 |
||||||||||||||
|
As a percent of total sales |
18.1 |
% |
11.2 |
% |
(14.7) |
% |
(4.8) |
% |
9.5 |
% |
13.0 |
% | ||||||||||||||||
|
Special items (gain) charge (2) |
$ |
(68) |
$ |
923 |
$ |
28,450 |
$ |
21,715 |
$ |
— |
$ |
— |
$ |
51,020 |
||||||||||||||
|
EBIT, as adjusted (4) |
$ |
247,009 |
$ |
39,412 |
$ |
(579) |
$ |
16,170 |
$ |
22,183 |
$ |
3,167 |
$ |
327,362 |
||||||||||||||
|
As a percent of total sales |
18.1 |
% |
11.4 |
% |
(0.3) |
% |
13.9 |
% |
9.5 |
% |
15.4 |
% | ||||||||||||||||
|
Nine months ended September 30, 2013 |
||||||||||||||||||||||||||||
|
Net sales |
$ |
1,242,736 |
$ |
317,674 |
$ |
203,112 |
$ |
132,592 |
$ |
241,766 |
$ |
— |
$ |
2,137,880 |
||||||||||||||
|
Inter-segment sales |
99,869 |
13,865 |
12,579 |
222 |
7,209 |
(133,744) |
— |
|||||||||||||||||||||
|
Total |
$ |
1,342,605 |
$ |
331,539 |
$ |
215,691 |
$ |
132,814 |
$ |
248,975 |
$ |
(133,744) |
$ |
2,137,880 |
||||||||||||||
|
EBIT (1) |
$ |
233,553 |
$ |
26,450 |
$ |
(3,464) |
$ |
19,921 |
$ |
21,411 |
$ |
(2,963) |
$ |
294,908 |
||||||||||||||
|
As a percent of total sales |
17.4 |
% |
8.0 |
% |
(1.6) |
% |
15.0 |
% |
8.6 |
% |
13.8 |
% | ||||||||||||||||
|
Special items (gain) charge (3) |
$ |
1,109 |
$ |
1,664 |
$ |
5,431 |
$ |
12,198 |
$ |
— |
$ |
— |
$ |
20,402 |
||||||||||||||
|
EBIT, as adjusted (4) |
$ |
234,662 |
$ |
28,114 |
$ |
1,967 |
$ |
32,119 |
$ |
21,411 |
$ |
(2,963) |
$ |
315,310 |
||||||||||||||
|
As a percent of total sales |
17.5 |
% |
8.5 |
% |
0.9 |
% |
24.2 |
% |
8.6 |
% |
14.7 |
% | ||||||||||||||||
|
(1) |
EBIT is defined as Operating income plus Equity earnings in affiliates and Other income. |
|
(2) |
Special items in the three and nine months ended September 30, 2014 include non-cash asset impairment charges partially offset by net rationalization gains including a gain on the sale of real estate. Special items in the nine months ended September 30, 2014 also include the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. |
|
(3) |
Special items in the three and nine months ended September 30, 2013 include net rationalization and asset impairment charges and the impact of the devaluation of the Venezuelan currency. |
|
(4) |
The primary profit measure used by management to assess segment performance is EBIT, as adjusted. EBIT for each operating segment is adjusted for special items to derive EBIT, as adjusted. |
|
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 2013 |
Volume |
Acquisitions |
Price |
Foreign Exchange |
Net Sales 2014 |
|||||||||||||||||||
|
Operating Segments |
||||||||||||||||||||||||
|
North America Welding |
$ |
404,113 |
$ |
23,208 |
$ |
9,917 |
$ |
4,670 |
$ |
(2,287) |
$ |
439,621 |
||||||||||||
|
Europe Welding |
98,522 |
12,340 |
— |
(1,048) |
(2,307) |
107,507 |
||||||||||||||||||
|
Asia Pacific Welding |
63,834 |
(7,000) |
— |
932 |
(362) |
57,404 |
||||||||||||||||||
|
South America Welding |
51,715 |
(20,858) |
— |
13,155 |
(11,150) |
32,862 |
||||||||||||||||||
|
The Harris Products Group |
73,691 |
5,432 |
— |
(709) |
(31) |
78,383 |
||||||||||||||||||
|
Consolidated |
$ |
691,875 |
$ |
13,122 |
$ |
9,917 |
$ |
17,000 |
$ |
(16,137) |
$ |
715,777 |
||||||||||||
|
% Change |
||||||||||||||||||||||||
|
North America Welding |
5.7 |
% |
2.5 |
% |
1.2 |
% |
(0.6) |
% |
8.8 |
% | ||||||||||||||
|
Europe Welding |
12.5 |
% |
— |
(1.1) |
% |
(2.3) |
% |
9.1 |
% | |||||||||||||||
|
Asia Pacific Welding |
(11.0) |
% |
— |
1.5 |
% |
(0.6) |
% |
(10.1) |
% | |||||||||||||||
|
South America Welding |
(40.3) |
% |
— |
25.4 |
% |
(21.6) |
% |
(36.5) |
% | |||||||||||||||
|
The Harris Products Group |
7.4 |
% |
— |
(1.0) |
% |
— |
6.4 |
% | ||||||||||||||||
|
Consolidated |
1.9 |
% |
1.4 |
% |
2.5 |
% |
(2.3) |
% |
3.5 |
% | ||||||||||||||
|
Nine Months Ended September 30th Change in Net Sales by Segment | ||||||||||||||||||||||||
|
Change in Net Sales due to: |
||||||||||||||||||||||||
|
Net Sales 2013 |
Volume |
Acquisitions |
Price |
Foreign Exchange |
Net Sales 2014 |
|||||||||||||||||||
|
Operating Segments |
||||||||||||||||||||||||
|
North America Welding |
$ |
1,242,736 |
$ |
(996) |
$ |
26,248 |
$ |
10,345 |
$ |
(7,316) |
$ |
1,271,017 |
||||||||||||
|
Europe Welding |
317,674 |
10,263 |
— |
(2,810) |
3,360 |
328,487 |
||||||||||||||||||
|
Asia Pacific Welding |
203,112 |
(12,650) |
— |
977 |
(5,752) |
185,687 |
||||||||||||||||||
|
South America Welding |
132,592 |
(31,654) |
— |
43,565 |
(28,597) |
115,906 |
||||||||||||||||||
|
The Harris Products Group |
241,766 |
1,848 |
— |
(14,484) |
(857) |
228,273 |
||||||||||||||||||
|
Consolidated |
$ |
2,137,880 |
$ |
(33,189) |
$ |
26,248 |
$ |
37,593 |
$ |
(39,162) |
$ |
2,129,370 |
||||||||||||
|
% Change |
||||||||||||||||||||||||
|
North America Welding |
(0.1) |
% |
2.1 |
% |
0.8 |
% |
(0.6) |
% |
2.3 |
% | ||||||||||||||
|
Europe Welding |
3.2 |
% |
— |
(0.9) |
% |
1.1 |
% |
3.4 |
% | |||||||||||||||
|
Asia Pacific Welding |
(6.2) |
% |
— |
0.5 |
% |
(2.8) |
% |
(8.6) |
% | |||||||||||||||
|
South America Welding |
(23.9) |
% |
— |
32.9 |
% |
(21.6) |
% |
(12.6) |
% | |||||||||||||||
|
The Harris Products Group |
0.8 |
% |
— |
(6.0) |
% |
(0.4) |
% |
(5.6) |
% | |||||||||||||||
|
Consolidated |
(1.6) |
% |
1.2 |
% |
1.8 |
% |
(1.8) |
% |
(0.4) |
% | ||||||||||||||
SOURCE Lincoln Electric Holdings, Inc.
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