Market Overview

Lincoln Electric Reports Second Quarter 2018 Results

Share:

Second Quarter 2018 Highlights

  • Sales increase 26.0% with 9.3% higher organic sales
  • EPS increases 13.0% to $1.04, Adjusted EPS increases 25.8% to $1.22
  • ROIC increases 200 basis points to 18.0%

CLEVELAND, July 23, 2018 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the "Company") (NASDAQ:LECO) today reported second quarter 2018 net income of $68.9 million, or diluted earnings per share (EPS) of $1.04.  This compares with $61.4 million, or $0.92 EPS in the prior year period.  Reported EPS includes special item after-tax charges of $11.5 million, or $0.18 EPS.  Excluding these items, second quarter 2018 adjusted net income increased 24.0% to $80.4 million, or $1.22 EPS, as compared with $64.8 million, or $0.97 EPS in the prior year period.  The second quarter 2018 effective tax rate was 27.0% due to special items.  Excluding special items, the effective tax rate was 24.6%, which compares to 26.7% in the comparable 2017 period.

Second quarter 2018 sales increased 26.0% to $790.1 million from a 16.0% benefit from acquisitions, a 4.9% increase in price, 4.4% higher volumes and 0.7% from favorable foreign exchange.

Operating income for the second quarter 2018 was $94.6 million, or 12.0% of sales.  This compares with operating income of $85.6 million, or 13.7% of sales, in the comparable 2017 period.  On an adjusted basis, operating income increased 18.8% to $107.0 million, or 13.5% of sales, as compared with $90.1 million, or 14.4% of sales, in the prior year period.  The Air Liquide Welding acquisition had an unfavorable impact of approximately 120 basis points to the adjusted operating income margin.

"Our second quarter results demonstrate solid execution of our core initiatives focused on organic growth and rapid integration of our European welding business," stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. "We are well-positioned in this portion of the cycle and we will continue to focus on mitigating inflation, richening our portfolio of solutions and generating exceptional value for our customers and shareholders."

Six Months 2018 Summary

Net income for the six months ended June 30, 2018 was $129.7 million, or $1.96 EPS.  This compares with $117.2 million, or $1.76 EPS, in the comparable 2017 period.  Reported EPS includes special item after-tax net charges of $24.0 million or $0.36 EPS.  Excluding these items, adjusted net income for the six months ended June 30, 2018 increased 24.5% to $153.7 million, or $2.32 EPS, compared with $123.4 million, or $1.85 EPS, in the comparable 2017 period.  The effective tax rate for the six months ended June 30, 2018 was 27.3% due to special items.  Excluding special items, the effective tax rate was 24.5%, which compares to 27.4% in the comparable 2017 period.

Sales increased 28.2% to $1.5 billion in the six months ended June 30, 2018 from a 17.1% benefit from acquisitions, 4.8% higher volumes, a 4.6% increase in price and 1.7% from favorable foreign exchange.

Operating income for the six months ended June 30, 2018 was $179.8 million, or 11.6% of sales.  This compares with operating income of $165.0 million, or 13.7% of sales, in the comparable 2017 period.  On an adjusted basis, operating income increased 18.0% to $204.2 million, or 13.2% of sales, as compared with $173.1 million, or 14.3% of sales, in the comparable 2017 period.  For the first half of 2018, the Air Liquide Welding acquisition had an unfavorable impact of approximately 120 basis points to the adjusted operating income margin.

Webcast Information

A conference call to discuss second quarter 2018 financial results will be webcast live today, July 23, 2018, at 11:00 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, 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 2576158.  Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the second quarter 2018 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 63 manufacturing locations, including operations and joint ventures in 23 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 EBIT, Adjusted net income, Adjusted diluted earnings per share and Return on invested capital 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 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; 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 the Air Liquide Welding business acquisition; 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 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 for the year ended December 31, 2017.

Contact

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


         
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Consolidated Statements of Income
 
    Three Months Ended June 30,   Fav (Unfav) to
Prior Year
    2018   % of Sales   2017   % of Sales   $   %
Net sales   $ 790,052     100.0 %   $ 626,858     100.0 %   $ 163,194     26.0 %
Cost of goods sold   519,936     65.8 %   410,547     65.5 %   (109,389 )   (26.6 %)
Gross profit   270,116     34.2 %   216,311     34.5 %   53,805     24.9 %
Selling, general & administrative expenses   163,940     20.8 %   130,738     20.9 %   (33,202 )   (25.4 %)
Rationalization and asset impairment charges   11,542     1.5 %           (11,542 )   (100.0 %)
Operating income   94,634     12.0 %   85,573     13.7 %   9,061     10.6 %
Interest expense, net   4,812     0.6 %   5,052     0.8 %   240     4.8 %
Other income (expense)   4,441     0.6 %   3,445     0.5 %   996     28.9 %
Income before income taxes   94,263     11.9 %   83,966     13.4 %   10,297     12.3 %
Income taxes   25,404     3.2 %   22,635     3.6 %   (2,769 )   (12.2 %)
Effective tax rate   27.0 %       27.0 %            
Net income including non-controlling interests   68,859     8.7 %   61,331     9.8 %   7,528     12.3 %
Non-controlling interests in subsidiaries' earnings (loss)   (5 )       (21 )       16     76.2 %
Net income   $ 68,864     8.7 %   $ 61,352     9.8 %   $ 7,512     12.2 %
                         
Basic earnings per share   $ 1.05         $ 0.93         $ 0.12     12.9 %
Diluted earnings per share   $ 1.04         $ 0.92         $ 0.12     13.0 %
Weighted average shares (basic)   65,337         65,811              
Weighted average shares (diluted)   66,121         66,743              
                             
    Six Months Ended June 30,   Fav (Unfav) to
Prior Year
    2018   % of Sales   2017   % of Sales   $   %
Net sales   $ 1,547,748     100.0 %   $ 1,207,755     100.0 %   $ 339,993     28.2 %
Cost of goods sold   1,021,078     66.0 %   788,781     65.3 %   (232,297 )   (29.5 %)
Gross profit   526,670     34.0 %   418,974     34.7 %   107,696     25.7 %
Selling, general & administrative expenses   325,131     21.0 %   253,994     21.0 %   (71,137 )   (28.0 %)
Rationalization and asset impairment charges   21,717     1.4 %           (21,717 )   (100.0 %)
Operating income   179,822     11.6 %   164,980     13.7 %   14,842     9.0 %
Interest expense, net   9,253     0.6 %   10,389     0.9 %   1,136     10.9 %
Other income (expense)   7,892     0.5 %   7,275     0.6 %   617     8.5 %
Income before income taxes   178,461     11.5 %   161,866     13.4 %   16,595     10.3 %
Income taxes   48,782     3.2 %   44,687     3.7 %   (4,095 )   (9.2 %)
Effective tax rate   27.3 %       27.6 %       0.3 %    
Net income including non-controlling interests   129,679     8.4 %   117,179     9.7 %   12,500     10.7 %
Non-controlling interests in subsidiaries' earnings (loss)   (9 )       (17 )       8     47.1 %
Net income   $ 129,688     8.4 %   $ 117,196     9.7 %   $ 12,492     10.7 %
                         
Basic earnings per share   $ 1.98         $ 1.78         $ 0.20     11.2 %
Diluted earnings per share   $ 1.96         $ 1.76         $ 0.20     11.4 %
Weighted average shares (basic)   65,458         65,750              
Weighted average shares (diluted)   66,257         66,666              
                             


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
 
Balance Sheet Highlights
 
Selected Consolidated Balance Sheet Data   June 30, 2018   December 31, 2017
Cash and cash equivalents   $ 357,094     $ 326,701  
Marketable securities   139,059     179,125  
Total current assets   1,411,567     1,373,608  
Property, plant and equipment, net   468,205     477,031  
Total assets   2,433,731     2,406,547  
Total current liabilities   539,758     528,742  
Short-term debt (1)   1,889     2,131  
Long-term debt, less current portion   700,194     704,136  
Total equity   943,508     932,453  
         
Operating Working Capital   June 30, 2018   December 31, 2017
Accounts receivable, net   $ 425,806     $ 395,279  
Inventories   365,634     348,667  
Trade accounts payable   269,824     269,763  
Operating working capital   $ 521,616     $ 474,183  
         
Average operating working capital to Net sales (2) (3)   16.5 %   15.9 %
         
Invested Capital   June 30, 2018   December 31, 2017
Short-term debt (1)   $ 1,889     $ 2,131  
Long-term debt, less current portion   700,194     704,136  
Total debt   702,083     706,267  
Total equity   943,508     932,453  
Invested capital   $ 1,645,591     $ 1,638,720  
         
Total debt / invested capital   42.7 %   43.1 %
  1. Includes current portion of long-term debt.
  2. Average operating working capital to Net sales is defined as operating working capital as of period end divided by annualized rolling three months of Net sales. 
  3. Average operating working capital to Net sales excluding the acquisition of Air Liquide Welding was 15.2% and 14.2% in the 2018 and 2017 periods, respectively.


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,
    2018   2017   2018   2017
Operating income as reported   $ 94,634     $ 85,573     $ 179,822     $ 164,980  
Special items (pre-tax):                
Rationalization and asset impairment charges (2)   11,542         21,717      
Acquisition transaction and integration costs (3)   788     4,498     2,695     8,113  
Adjusted operating income (1)   $ 106,964     $ 90,071     $ 204,234     $ 173,093  
As a percent of total sales   13.5 %   14.4 %   13.2 %   14.3 %
                 
Net income as reported   $ 68,864     $ 61,352     $ 129,688     $ 117,196  
Special items:                
Rationalization and asset impairment charges (2)   11,542         21,717      
Acquisition transaction and integration costs (3)   788     4,498     2,695     8,113  
Pension settlement charges (4)           758      
Tax effect of Special items (5)   (784 )   (1,004 )   (1,165 )   (1,885 )
Adjusted net income (1)   80,410     64,846     153,693     123,424  
Non-controlling interests in subsidiaries' earnings (loss)   (5 )   (21 )   (9 )   (17 )
Interest expense, net   4,812     5,052     9,253     10,389  
Income taxes as reported   25,404     22,635     48,782     44,687  
Tax effect of Special items (5)   784     1,004     1,165     1,885  
Adjusted EBIT (1)   $ 111,405     $ 93,516     $ 212,884     $ 180,368  
                 
Diluted earnings per share as reported   $ 1.04     $ 0.92     $ 1.96     $ 1.76  
Special items per share   0.18     0.05     0.36     0.09  
Adjusted diluted earnings per share (1)   $ 1.22     $ 0.97     $ 2.32     $ 1.85  
                 
Weighted average shares (diluted)   66,121     66,743     66,257     66,666  
  1. Adjusted operating income, Adjusted EBIT, Adjusted net income and Adjusted diluted earnings per share 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.
  2. Primarily related to severance and asset impairments.
  3. Related to the acquisition of Air Liquide Welding.
  4. Related to a lump sum pension payment.
  5. Includes the net tax impact of Special items recorded during the respective periods, including an adjustment to taxes on unremitted foreign earnings related to the U.S. Tax Act of $2,500 in the six months ended June 30, 2018. 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   2018   2017
Net income as reported   $ 259,995     $ 230,640  
Rationalization and asset impairment charges   28,307      
Pension settlement charges   8,908      
Acquisition transaction and integration costs   9,584     8,113  
Amortization of step up in value of acquired inventories   4,578      
Bargain purchase gain   (49,650 )    
Tax effect of Special items (3)   21,256     (1,885 )
Adjusted net income (1)   $ 282,978     $ 236,868  
Plus: Interest expense, net of tax of $6,077 and $8,988 in 2018 and 2017, respectively   18,265     14,489  
Less: Interest income, net of tax of $1,509 and $1,244 in 2018 and 2017, respectively   4,537     2,005  
Adjusted net income before tax effected interest   $ 296,706     $ 249,352  
         
Invested Capital   June 30, 2018   June 30, 2017
Short-term debt   $ 1,889     $ 1,953  
Long-term debt, less current portion   700,194     704,732  
Total debt   702,083     706,685  
Total equity   943,508     851,776  
Invested capital   $ 1,645,591     $ 1,558,461  
         
Return on invested capital (1)(2)   18.0 %   16.0 %
  1. Adjusted net income and Return on invested capital 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.
  2. Return on invested capital is defined as rolling 12 months of Adjusted net income before tax-effected interest income and expense divided by invested capital.
  3. Includes the net tax impact of Special items recorded during the respective periods, including the net impact of the U.S. Tax Act  of $31,116 in the twelve months ended June 30, 2018. 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,
    2018   2017
OPERATING ACTIVITIES:        
Net income   $ 68,864     $ 61,352  
Non-controlling interests in subsidiaries' loss   (5 )   (21 )
Net income including non-controlling interests   68,859     61,331  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net gains   (50 )    
Depreciation and amortization   18,189     15,840  
Equity (earnings) loss in affiliates, net   (839 )   195  
Pension income   (945 )   (1,334 )
Other non-cash items, net   291     8,473  
         
Changes in operating assets and liabilities, net of effects from acquisitions:        
   Decrease (increase) in accounts receivable   561     (15,811 )
   Decrease (increase) in inventories   153     (3,811 )
   Increase in trade accounts payable   1,670     5,455  
   Net change in other current assets and liabilities   (9,124 )   3,536  
   Net change in other long-term assets and liabilities   1,016     1,573  
NET CASH PROVIDED BY OPERATING ACTIVITIES   79,781     75,447  
         
INVESTING ACTIVITIES:        
Capital expenditures   (16,726 )   (16,094 )
Proceeds from sale of property, plant and equipment   109     899  
Purchase of marketable securities   (129,122 )   (35,009 )
Proceeds from marketable securities   126,767     1,190  
Other investing activities   356      
NET CASH USED BY INVESTING ACTIVITIES   (18,616 )   (49,014 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   273     (321 )
Proceeds from exercise of stock options   637     7,754  
Purchase of shares for treasury   (35,508 )   (7,345 )
Cash dividends paid to shareholders   (25,589 )   (23,030 )
Other financing activities       (15,182 )
NET CASH USED BY FINANCING ACTIVITIES   (60,187 )   (38,124 )
         
Effect of exchange rate changes on Cash and cash equivalents   (12,940 )   5,986  
DECREASE IN CASH AND CASH EQUIVALENTS   (11,962 )   (5,705 )
Cash and cash equivalents at beginning of period   369,056     401,440  
Cash and cash equivalents at end of period   $ 357,094     $ 395,735  
         
Cash dividends paid per share   $ 0.39     $ 0.35  
                 


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows
 
    Six Months Ended June 30,
    2018   2017
OPERATING ACTIVITIES:        
Net income   $ 129,688     $ 117,196  
Non-controlling interests in subsidiaries' loss   (9 )   (17 )
Net income including non-controlling interests   129,679     117,179  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net charges   626      
Depreciation and amortization   36,323     32,006  
Equity earnings in affiliates, net   (1,377 )   (75 )
Pension income and settlement charges   (1,067 )   (2,679 )
Other non-cash items, net   7,715     14,464  
         
Changes in operating assets and liabilities, net of effects from acquisitions:        
   Increase in accounts receivable   (39,907 )   (40,006 )
   Increase in inventories   (27,899 )   (24,757 )
   Increase in trade accounts payable   4,861     12,619  
   Net change in other current assets and liabilities   12,384     38,869  
   Net change in other long-term assets and liabilities   2,220     4,067  
NET CASH PROVIDED BY OPERATING ACTIVITIES   123,558     151,687  
         
INVESTING ACTIVITIES:        
Capital expenditures   (31,383 )   (28,131 )
Acquisition of businesses, net of cash acquired   6,235      
Proceeds from sale of property, plant and equipment   227     1,102  
Purchase of marketable securities   (218,667 )   (69,934 )
Proceeds from marketable securities   258,733     4,990  
Other investing activities   356      
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES   15,501     (91,973 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   210     (211 )
Proceeds from exercise of stock options   2,599     13,397  
Purchase of shares for treasury   (50,232 )   (7,748 )
Cash dividends paid to shareholders   (51,250 )   (46,016 )
Other financing activities       (15,189 )
NET CASH USED BY FINANCING ACTIVITIES   (98,673 )   (55,767 )
         
Effect of exchange rate changes on Cash and cash equivalents   (9,993 )   12,609  
INCREASE IN CASH AND CASH EQUIVALENTS   30,393     16,556  
Cash and cash equivalents at beginning of period   326,701     379,179  
Cash and cash equivalents at end of period   $ 357,094     $ 395,735  
         
Cash dividends paid per share   $ 0.78     $ 0.70  
                 


Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)
 
    Americas
Welding
  International
Welding
  The Harris
Products Group
  Corporate /
Eliminations
  Consolidated
Three months ended June 30, 2018                        
Net sales   $ 462,515     $ 243,373     $ 84,164     $     $ 790,052  
Inter-segment sales   31,240     5,497     2,003     (38,740 )    
Total   $ 493,755     $ 248,870     $ 86,167     $ (38,740 )   $ 790,052  
                     
Net income                   $ 68,864  
As a percent of total sales                   8.7 %
                     
EBIT (1)   $ 88,158     $ 4,734     $ 10,157     $ (3,974 )   $ 99,075  
As a percent of total sales   17.9 %   1.9 %   11.8 %       12.5 %
Special items charges (gains) (3)       11,542         788     12,330  
Adjusted EBIT (2)   $ 88,158     $ 16,276     $ 10,157     $ (3,186 )   $ 111,405  
As a percent of total sales   17.9 %   6.5 %   11.8 %       14.1 %
                     
Three months ended June 30, 2017                        
Net sales   $ 405,147     $ 141,498     $ 80,213     $     $ 626,858  
Inter-segment sales   27,374     5,478     2,399     (35,251 )    
Total   $ 432,521     $ 146,976     $ 82,612     $ (35,251 )   $ 626,858  
                     
Net income                   $ 61,352  
As a percent of total sales                   9.8 %
                     
EBIT (1)   $ 74,498     $ 9,496     $ 9,787     $ (4,763 )   $ 89,018  
As a percent of total sales   17.2 %   6.5 %   11.8 %       14.2 %
Special items charges (gains) (3)               4,498     4,498  
Adjusted EBIT (2)   $ 74,498     $ 9,496     $ 9,787     $ (265 )   $ 93,516  
As a percent of total sales   17.2 %   6.5 %   11.8 %       14.9 %
  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 2018 reflect rationalization and asset impairment charges of $11,542 in International Welding.  Special items in 2018 and 2017 also reflect acquisition transaction and integration costs of $788 and $4,498, respectively, in Corporate / Eliminations related to the acquisition of Air Liquide Welding.


Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)
 
    Americas
Welding
  International
Welding
  The Harris
Products Group
  Corporate /
Eliminations
  Consolidated
Six months ended June 30, 2018                        
Net sales   $ 897,287     $ 490,693     $ 159,768     $     $ 1,547,748  
Inter-segment sales   57,826     10,006     3,910     (71,742 )    
Total   $ 955,113     $ 500,699     $ 163,678     $ (71,742 )   $ 1,547,748  
                     
Net income                   $ 129,688  
As a percent of total sales                   8.4 %
                     
EBIT (1)   $ 164,839     $ 9,532     $ 19,382     $ (6,039 )   $ 187,714  
As a percent of total sales   17.3 %   1.9 %   11.8 %       12.1 %
Special items charges (gains) (3)   758     21,717         2,695     25,170  
Adjusted EBIT (2)   $ 165,597     $ 31,249     $ 19,382     $ (3,344 )   $ 212,884  
As a percent of total sales   17.3 %   6.2 %   11.8 %       13.8 %
                     
Six months ended June 30, 2017                        
Net sales   $ 788,471     $ 270,386     $ 148,898     $     $ 1,207,755  
Inter-segment sales   49,834     9,763     4,699     (64,296 )    
Total   $ 838,305     $ 280,149     $ 153,597     $ (64,296 )   $ 1,207,755  
                     
Net income                   $ 117,196  
As a percent of total sales                   9.7 %
                     
EBIT (1)   $ 143,221     $ 19,101     $ 18,247     $ (8,314 )   $ 172,255  
As a percent of total sales   17.1 %   6.8 %   11.9 %       14.3 %
Special items charges (gains) (3)               8,113     8,113  
Adjusted EBIT (2)   $ 143,221     $ 19,101     $ 18,247     $ (201 )   $ 180,368  
As a percent of total sales   17.1 %   6.8 %   11.9 %       14.9 %
  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 2018 reflect rationalization and asset impairment charges of $21,717 in International Welding and pension settlement charges of $758 in Americas Welding.  Special items in 2018 and 2017 also reflect acquisition transaction and integration costs of $2,695 and $8,113, respectively, in Corporate / Eliminations related to the acquisition of Air Liquide 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
2017
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2018
Operating Segments                        
Americas Welding   $ 405,147     $ 31,023     $ 4,059     $ 21,958     $ 328     $ 462,515  
International Welding   141,498     (6,369 )   96,318     7,772     4,154     243,373  
The Harris Products Group   80,213     2,823         1,174     (46 )   84,164  
Consolidated   $ 626,858     $ 27,477     $ 100,377     $ 30,904     $ 4,436     $ 790,052  
                         
% Change                        
Americas Welding       7.7 %   1.0 %   5.4 %   0.1 %   14.2 %
International Welding       (4.5 %)   68.1 %   5.5 %   2.9 %   72.0 %
The Harris Products Group       3.5 %       1.5 %   (0.1 %)   4.9 %
Consolidated       4.4 %   16.0 %   4.9 %   0.7 %   26.0 %
                         
Six Months Ended June 30th Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2017
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2018
Operating Segments                        
Americas Welding   $ 788,471     $ 59,585     $ 7,665     $ 39,640     $ 1,926     $ 897,287  
International Welding   270,386     (11,106 )   199,264     14,791     17,358     490,693  
The Harris Products Group   148,898     9,203         678     989     159,768  
Consolidated   $ 1,207,755     $ 57,682     $ 206,929     $ 55,109     $ 20,273     $ 1,547,748  
                         
% Change                        
Americas Welding   %   7.6 %   1.0 %   5.0 %   0.2 %   13.8 %
International Welding       (4.1 %)   73.7 %   5.5 %   6.4 %   81.5 %
The Harris Products Group       6.2 %       0.5 %   0.7 %   7.3 %
Consolidated       4.8 %   17.1 %   4.6 %   1.7 %   28.2 %

Primary Logo

View Comments and Join the Discussion!