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%

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