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Lincoln Electric Holdings Inc.$85.01$.64.76%

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 Lincoln Electric Reports Third Quarter 2018 Results
   Thursday, October 25, 2018 7:30:00 AM ET

Third Quarter 2018 Highlights

  • Sales increase 10.1%
  • EPS decreases 32.7% to $1.07, Adjusted EPS increases 30.1% to $1.21
  • ROIC increases 410 basis points to 19.3%
  • $97 million returned to shareholders and announced a 21% increase in the dividend payout rate

CLEVELAND, Oct. 25, 2018 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2018 net income of $70.5 million, or diluted earnings per share (EPS) of $1.07.  This compares with $106.1 million, or $1.59 EPS in the prior year period. Reported EPS includes special item after-tax charges of $8.9 million, or $0.14 EPS. The prior year included special item after-tax income of $44.4 million, including a bargain purchase gain of $51.6 million. Excluding these items, third quarter 2018 adjusted net income increased 28.5% to $79.4 million, or $1.21 EPS, as compared with $61.8 million, or $0.93 EPS in the prior year period.



Third quarter 2018 sales increased 10.1% to $737.1 million from a 14.9% improvement in organic sales in the Americas Welding segment. Organic sales in the International Welding segment declined 5.3% in the quarter.

Operating income for the third quarter 2018 was $100.8 million, or 13.7% of sales. This compares with operating income of $135.6 million, or 20.3% of sales, in the comparable 2017 period. On an adjusted basis, operating income increased 16.5% to $104.4 million, or 14.2% of sales, as compared with $89.6 million, or 13.4% of sales, in the prior year period.

“We achieved solid third quarter organic sales growth from strong demand in Americas Welding and price management worldwide,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer.  “We are realizing synergies in our International Welding business from our Air Liquide Welding acquisition despite incurring lower volumes from our integration activities. We remain very confident in the long-term value we are generating from this acquisition. Our regional initiatives, price measures and productivity improvements delivered higher margin performance, solid cash flows and cash conversion in the quarter. We continue to execute well on our strategic goals and are positioned to deliver superior value for our stakeholders.”

Nine Months 2018 Summary

Net income for the nine months ended September 30, 2018 was $200.2 million, or $3.03 EPS.  This compares with $223.3 million, or $3.35 EPS, in the comparable 2017 period. Reported EPS includes special item after-tax net charges of $32.9 million or $0.50 EPS. The prior year included special item after-tax income of $38.1 million, including a bargain purchase gain of $51.6 million. Excluding these items, adjusted net income for the nine months ended September 30, 2018 increased 25.9% to $233.1 million, or $3.53 EPS, compared with $185.2 million, or $2.78 EPS, in the comparable 2017 period. The effective tax rate for the nine months ended September 30, 2018 was 27.0% due to special items. Excluding special items, the effective tax rate was 24.1%, which compares to 28.8% in the comparable 2017 period.

Sales increased 21.7% to $2.3 billion in the nine months ended September 30, 2018 from a 12.6% benefit from acquisitions, an 8.7% improvement in organic sales and 0.5% from favorable foreign exchange.

Operating income for the nine months ended September 30, 2018 was $280.6 million, or 12.3% of sales.  This compares with operating income of $300.6 million, or 16.0% of sales, in the comparable 2017 period. On an adjusted basis, operating income increased 17.5% to $308.6 million, or 13.5% of sales, as compared with $262.7 million, or 14.0% of sales, in the comparable 2017 period.

Dividend

The Company's Board of Directors declared a 21% increase in the quarterly cash dividend, from $0.39 per share to $0.47 per share, or $1.88 per share on an annual basis. The declared quarterly cash dividend of $0.47 per share is payable January 15, 2019 to shareholders of record as of December 31, 2018.

Webcast Information

A conference call to discuss third quarter 2018 financial results will be webcast live today, October 25, 2018, 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, 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 1636717.  Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the third 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 Electric has 56 manufacturing locations, including operations and joint ventures in 20 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 September 30, Fav (Unfav) to
Prior Year
  2018 % of Sales 2017 % of Sales $ %
Net sales $737,099  100.0% $669,491  100.0% $67,608  10.1%
Cost of goods sold 485,547  65.9% 451,610  67.5% (33,937) (7.5%)
Gross profit 251,552  34.1% 217,881  32.5% 33,671  15.5%
Selling, general & administrative expenses 148,129  20.1% 133,826  20.0% (14,303) (10.7%)
Rationalization and asset impairment charges 2,636  0.4%     (2,636) (100.0%)
Bargain purchase gain     (51,585) 7.7% (51,585) (100.0%)
Operating income 100,787  13.7% 135,640  20.3% (34,853) (25.7%)
Interest expense, net 3,969  0.5% 4,595  0.7% 626  13.6%
Other income (expense) (1,074) 0.1% (403) 0.1% (671) (166.5%)
Income before income taxes 95,744  13.0% 130,642  19.5% (34,898) (26.7%)
Income taxes 25,209  3.4% 24,531  3.7% (678) (2.8%)
Effective tax rate 26.3%   18.8%   (7.5%)  
Net income including non-controlling interests 70,535  9.6% 106,111  15.8% (35,576) (33.5%)
Non-controlling interests in subsidiaries’ earnings (loss) (4)   (15)   11  73.3%
Net income $70,539  9.6% $106,126  15.9% $(35,587) (33.5%)
             
Basic earnings per share $1.09    $1.61    $(0.52) (32.3%)
Diluted earnings per share $1.07    $1.59    $(0.52) (32.7%)
Weighted average shares (basic) 64,821    65,806       
Weighted average shares (diluted) 65,652    66,702       
  Nine Months Ended September 30, Fav (Unfav) to
Prior Year
  2018 % of Sales 2017 % of Sales $ %
Net sales $2,284,847  100.0% $1,877,246  100.0% $407,601  21.7%
Cost of goods sold 1,506,625  65.9% 1,240,391  66.1% (266,234) (21.5%)
Gross profit 778,222  34.1% 636,855  33.9% 141,367  22.2%
Selling, general & administrative expenses 473,260  20.7% 387,820  20.7% (85,440) (22.0%)
Rationalization and asset impairment charges 24,353  1.1%     (24,353) (100.0%)
Bargain purchase gain     (51,585) 2.7% (51,585) (100.0%)
Operating income 280,609  12.3% 300,620  16.0% (20,011) (6.7%)
Interest expense, net 13,222  0.6% 14,984  0.8% 1,762  11.8%
Other income (expense) 6,818  0.3% 6,872  0.4% (54) (0.8%)
Income before income taxes 274,205  12.0% 292,508  15.6% (18,303) (6.3%)
Income taxes 73,991  3.2% 69,218  3.7% (4,773) (6.9%)
Effective tax rate 27.0%   23.7%   (3.3%)  
Net income including non-controlling interests 200,214  8.8% 223,290  11.9% (23,076) (10.3%)
Non-controlling interests in subsidiaries’ earnings (loss) (13)   (32)   19  59.4%
Net income $200,227  8.8% $223,322  11.9% $(23,095) (10.3%)
             
Basic earnings per share $3.07    $3.40    $(0.33) (9.7%)
Diluted earnings per share $3.03    $3.35    $(0.32) (9.6%)
Weighted average shares (basic) 65,245    65,769       
Weighted average shares (diluted) 66,055    66,679       
               


 
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
 
Balance Sheet Highlights
     
Selected Consolidated Balance Sheet Data September 30, 2018 December 31, 2017
Cash and cash equivalents $398,200  $326,701 
Marketable securities 99,282  179,125 
Total current assets 1,405,572  1,373,608 
Property, plant and equipment, net 461,828  477,031 
Total assets 2,419,645  2,406,547 
Total current liabilities 545,551  528,742 
Short-term debt (1) 794  2,131 
Long-term debt, less current portion 698,468  704,136 
Total equity 927,868  932,453 
     
Operating Working Capital September 30, 2018 December 31, 2017
Accounts receivable, net $409,594  $395,279 
Inventories 377,431  348,667 
Trade accounts payable 246,783  269,763 
Operating working capital $540,242  $474,183 
     
Average operating working capital to Net sales (2) 18.3% 15.9%
     
Invested Capital September 30, 2018 December 31, 2017
Short-term debt (1) $794  $2,131 
Long-term debt, less current portion 698,468  704,136 
Total debt 699,262  706,267 
Total equity 927,868  932,453 
Invested capital $1,627,130  $1,638,720 
     
Total debt / invested capital 43.0% 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.  
 
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,
  2018 2017 2018 2017
Operating income as reported $100,787  $135,640  $280,609  $300,620 
Special items (pre-tax):        
Rationalization and asset impairment charges (2) 2,636    24,353   
Acquisition transaction and integration costs (3) 970  3,273  3,665  11,386 
Amortization of step up in value of acquired inventories (3)   2,314    2,314 
Bargain purchase gain (3)   (51,585)   (51,585)
Adjusted operating income (1) $104,393  $89,642  $308,627  $262,735 
As a percent of total sales 14.2% 13.4% 13.5% 14.0%
         
Net income as reported $70,539  $106,126  $200,227  $223,322 
Special items:        
Rationalization and asset impairment charges (2) 2,636    24,353   
Acquisition transaction and integration costs (3) 970  3,273  3,665  11,386 
Pension settlement charges (4) 4,232  5,283  4,990  5,283 
Amortization of step up in value of acquired inventories (3)   2,314    2,314 
Bargain purchase gain (3)   (51,585)   (51,585)
Tax effect of Special items (5) 1,033  (3,636) (132) (5,521)
Adjusted net income (1) 79,410  61,775  233,103  185,199 
Non-controlling interests in subsidiaries’ loss (4) (15) (13) (32)
Interest expense, net 3,969  4,595  13,222  14,984 
Income taxes as reported 25,209  24,531  73,991  69,218 
Tax effect of Special items (5) (1,033) 3,636  132  5,521 
Adjusted EBIT (1) $107,551  $94,522  $320,435  $274,890 
         
Diluted earnings per share as reported $1.07  $1.59  $3.03  $3.35 
Special items per share 0.14  (0.66) 0.50  (0.57)
Adjusted diluted earnings per share (1) $1.21  $0.93  $3.53  $2.78 
         
Weighted average shares (diluted) 65,652  66,702  66,055  66,679 
             
  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, asset impairments and gains or losses on the disposal of assets.
  3. Related to the acquisition of Air Liquide Welding.
  4. Related to lump sum pension payments.
  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 $2,323 and $4,823 in the three and nine months ended September 30, 2018, respectively.

    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 2018 2017
Net income as reported $224,408  $276,717 
Rationalization and asset impairment charges 30,943   
Pension settlement charges 7,857  5,283 
Acquisition transaction and integration costs 7,281  11,386 
Amortization of step up in value of acquired inventories 2,264  2,314 
Bargain purchase adjustment (gain) 1,935  (51,585)
Tax effect of Special items (3) 25,925  (5,521)
Adjusted net income (1) $300,613  $238,594 
Plus: Interest expense, net of tax of $6,087 and $9,795 in 2018 and 2017, respectively 18,295  15,789 
Less: Interest income, net of tax of $1,676 and $1,614 in 2018 and 2017, respectively 5,036  2,602 
Adjusted net income before tax effected interest $313,872  $251,781 
     
Invested Capital September 30, 2018 September 30, 2017
Short-term debt $794  $2,135 
Long-term debt, less current portion 698,468  704,804 
Total debt 699,262  706,939 
Total equity 927,868  945,928 
Invested capital $1,627,130  $1,652,867 
     
Return on invested capital (1)(2) 19.3% 15.2%
       
  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 $33,439 in the twelve months ended September 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 September 30,
  2018 2017
OPERATING ACTIVITIES:    
Net income $70,539  $106,126 
Non-controlling interests in subsidiaries’ loss (4) (15)
Net income including non-controlling interests 70,535  106,111 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment net gains (2,034)  
Bargain purchase gain   (51,585)
Depreciation and amortization 17,623  18,451 
Equity earnings in affiliates, net (50) (141)
Pension expense and settlement charges 3,781  3,495 
Other non-cash items, net 1,653  (1,699)
     
Changes in operating assets and liabilities, net of effects from acquisitions:    
Decrease in accounts receivable 14,415  15,706 
(Increase) decrease in inventories (13,634) 2,231 
Decrease in trade accounts payable (22,384) (21,551)
Net change in other current assets and liabilities 33,932  22,978 
Net change in other long-term assets and liabilities 2,382  (329)
NET CASH PROVIDED BY OPERATING ACTIVITIES 106,219  93,667 
     
INVESTING ACTIVITIES:    
Capital expenditures (17,363) (10,828)
Acquisition of businesses, net of cash acquired   (72,468)
Proceeds from sale of property, plant and equipment 10,358  892 
Purchase of marketable securities (49,668) (75,619)
Proceeds from marketable securities 89,445  200 
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES 32,772  (157,823)
     
FINANCING ACTIVITIES:    
Net change in borrowings (856) (394)
Proceeds from exercise of stock options 1,849  936 
Purchase of shares for treasury (71,245) (15,264)
Cash dividends paid to shareholders (25,424) (23,067)
Other financing activities (2,170) (372)
NET CASH USED BY FINANCING ACTIVITIES (97,846) (38,161)
     
Effect of exchange rate changes on Cash and cash equivalents (39) 6,035 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 41,106  (96,282)
Cash and cash equivalents at beginning of period 357,094  395,735 
Cash and cash equivalents at end of period $398,200  $299,453 
     
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
 Nine Months Ended September 30,
  2018 2017
OPERATING ACTIVITIES:    
Net income $200,227  $223,322 
Non-controlling interests in subsidiaries’ loss (13) (32)
Net income including non-controlling interests 200,214  223,290 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment net gains (1,408)  
Bargain purchase gain   (51,585)
Depreciation and amortization 53,946  50,457 
Equity earnings in affiliates, net (1,427) (216)
Pension expense and settlement charges 2,714  816 
Other non-cash items, net 9,368  12,765 
     
Changes in operating assets and liabilities, net of effects from acquisitions:    
Increase in accounts receivable (25,492) (24,300)
Increase in inventories (41,533) (22,526)
Decrease in trade accounts payable (17,523) (8,932)
Net change in other current assets and liabilities 46,316  61,847 
Net change in other long-term assets and liabilities 4,602  3,738 
NET CASH PROVIDED BY OPERATING ACTIVITIES 229,777  245,354 
     
INVESTING ACTIVITIES:    
Capital expenditures (48,746) (38,959)
Acquisition of businesses, net of cash acquired 6,591  (72,468)
Proceeds from sale of property, plant and equipment 10,585  1,994 
Purchase of marketable securities (268,335) (145,553)
Proceeds from marketable securities 348,178  5,190 
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES 48,273  (249,796)
     
FINANCING ACTIVITIES:    
Net change in borrowings (646) (605)
Proceeds from exercise of stock options 4,448  14,333 
Purchase of shares for treasury (121,477) (23,012)
Cash dividends paid to shareholders (76,674) (69,083)
Other financing activities (2,170) (15,561)
NET CASH USED BY FINANCING ACTIVITIES (196,519) (93,928)
     
Effect of exchange rate changes on Cash and cash equivalents (10,032) 18,644 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 71,499  (79,726)
Cash and cash equivalents at beginning of period 326,701  379,179 
Cash and cash equivalents at end of period $398,200  $299,453 
     
Cash dividends paid per share $1.17  $1.05 
         


 
Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)
 
  Americas Welding International Welding The Harris
Products Group
 Corporate /
Eliminations
 Consolidated
Three months ended September 30, 2018        
Net sales $454,010  $209,622  $73,467  $  $737,099 
Inter-segment sales 31,845  3,663  1,537  (37,045)  
Total $485,855  $213,285  $75,004  $(37,045) $737,099 
           
Net income         $70,539 
As a percent of total sales         9.6%
           
EBIT (1) $85,021  $8,085  $8,676  $(2,069) $99,713 
As a percent of total sales 17.5% 3.8% 11.6%   13.5%
Special items charges (gains) (3) 4,232  2,636    970  7,838 
Adjusted EBIT (2) $89,253  $10,721  $8,676  $(1,099) $107,551 
As a percent of total sales 18.4% 5.0% 11.6%   14.6%
           
Three months ended September 30, 2017        
Net sales $398,289  $197,617  $73,585  $  $669,491 
Inter-segment sales 25,546  5,451  2,064  (33,061)  
Total $423,835  $203,068  $75,649  $(33,061) $669,491 
           
Net income         $106,126 
As a percent of total sales         15.9%
           
EBIT (1) $68,813  $8,298  $9,244  $48,882  $135,237 
As a percent of total sales 16.2% 4.1% 12.2%   20.2%
Special items charges (gains) (4) 5,283  2,314    (48,312) (40,715)
Adjusted EBIT (2) $74,096  $10,612  $9,244  $570  $94,522 
As a percent of total sales 17.5% 5.2% 12.2%   14.1%
               
  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 pension settlement charges of $4,232 in Americas Welding, rationalization and asset impairment charges of $2,636 in International Welding and acquisition transaction and integration costs of $970 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
  4. Special items in 2017 reflect pension settlement charges of $5,283 in Americas Welding, amortization of step up in value of acquired inventories of $2,314 in International Welding and acquisition transaction and integration costs of $3,273 and a bargain purchase gain of $51,585 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
Nine months ended September 30, 2018        
Net sales $1,351,297  $700,315  $233,235  $  $2,284,847 
Inter-segment sales 89,671  13,669  5,447  (108,787)  
Total $1,440,968  $713,984  $238,682  $(108,787) $2,284,847 
           
Net income         $200,227 
As a percent of total sales         8.8%
           
EBIT (1) $249,860  $17,617  $28,058  $(8,108) $287,427 
As a percent of total sales 17.3% 2.5% 11.8%   12.6%
Special items charges (gains) (3) 4,990  24,353    3,665  33,008 
Adjusted EBIT (2) $254,850  $41,970  $28,058  $(4,443) $320,435 
As a percent of total sales 17.7% 5.9% 11.8%   14.0%
           
Nine months ended September 30, 2017        
Net sales $1,186,760  $468,003  $222,483  $  $1,877,246 
Inter-segment sales 75,380  15,214  6,763  (97,357)  
Total $1,262,140  $483,217  $229,246  $(97,357) $1,877,246 
           
Net income         $223,322 
As a percent of total sales         11.9%
           
EBIT (1) $212,034  $27,399  $27,491  $40,568  $307,492 
As a percent of total sales 16.8% 5.7% 12.0%   16.4%
Special items charges (gains) (4) 5,283  2,314    (40,199) (32,602)
Adjusted EBIT (2) $217,317  $29,713  $27,491  $369  $274,890 
As a percent of total sales 17.2% 6.1% 12.0%   14.6%
               
  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 pension settlement charges of $4,990 in Americas Welding, rationalization and asset impairment charges of $24,353 in International Welding and acquisition transaction and integration costs of $3,665 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
  4. Special items in 2017 reflect pension settlement charges of $5,283 in Americas Welding, amortization of step up in value of acquired inventories of $2,314 in International Welding and acquisition transaction and integration costs of $11,386 and a bargain purchase gain of $51,585 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 September 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 $398,289  $23,084  $1,148  $36,128  $(4,639) $454,010 
International Welding 197,617  (20,659) 28,334  10,360  (6,030) 209,622 
The Harris Products Group 73,585  174    753  (1,045) 73,467 
Consolidated $669,491  $2,599  $29,482  $47,241  $(11,714) $737,099 
             
% Change            
Americas Welding   5.8% 0.3% 9.1% (1.2%) 14.0%
International Welding   (10.5%) 14.3% 5.2% (3.1%) 6.1%
The Harris Products Group   0.2%   1.0% (1.4%) (0.2%)
Consolidated   0.4% 4.4% 7.1% (1.7%) 10.1%
             
Nine Months Ended September 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 $1,186,760  $82,669  $8,813  $75,768  $(2,713) $1,351,297 
International Welding 468,003  (31,765) 227,598  25,151  11,328  700,315 
The Harris Products Group 222,483  9,377    1,431  (56) 233,235 
Consolidated $1,877,246  $60,281  $236,411  $102,350  $8,559  $2,284,847 
             
% Change            
Americas Welding    7.0% 0.7% 6.4% (0.2%) 13.9%
International Welding   (6.8%) 48.6% 5.4% 2.4% 49.6%
The Harris Products Group   4.2%   0.6%   4.8%
Consolidated   3.2% 12.6% 5.5% 0.5% 21.7%
                  

lincoln logo.jpg

Source: Lincoln Electric Holdings, Inc.


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