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Lincoln Electric Holdings Inc.$105.54$1.671.61%

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 Lincoln Electric Reports Fourth Quarter and Full Year 2019 Results
   Thursday, February 13, 2020 7:30:00 AM ET


Fourth Quarter and Full Year 2019 Highlights
•  Q4 EPS decreases 23.7% to $1.03, Adjusted EPS decreases 10.9% to $1.15
•  Q4 Cash flow from operations increases 23.3% to $123 million and achieved 150% cash conversion (1)
•  Record full year cash flow from operations increases 22.5% to $403 million
•  $411 million returned to shareholders through dividends and share repurchases for full year



(1)Cash conversion is defined as Net cash provided by operating activities less Capital expenditures divided by Adjusted net income.
  

CLEVELAND, Ohio, Feb. 13, 2020 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2019 net income of $63.7 million, or diluted earnings per share (EPS) of $1.03, which includes special item after-tax net charges of $7.3 million, or $0.12 EPS. This compares with prior year net income of $86.8 million, or $1.35 EPS, which included special item after-tax benefits of $3.3 million, or $0.06 EPS. Excluding these items, fourth quarter 2019 adjusted net income was $71.0 million, or $1.15 EPS, as compared with $83.5 million, or $1.29 EPS in the prior year period. The effective tax rate was 20.6% in the fourth quarter 2019 as compared with 8.1% in the prior year period. Excluding special items, the adjusted effective tax rate was 20.4%, which compares to 14.7% in the comparable 2018 period.

Fourth quarter 2019 sales decreased 1.0% to $736.3 million from a 6.5% decrease in organic sales, offset by a 5.9% benefit from acquisitions. Operating income for the fourth quarter 2019 was $82.7 million, or 11.2% of sales. This compares with operating income of $94.9 million, or 12.8% of sales, in the prior year period. Excluding special items, adjusted operating income was $91.6 million, or 12.4% of sales, as compared with $96.7 million, or 13.0% of sales, in the prior year period.

“In 2019, we achieved solid returns, record cash flow generation and strong cash conversion as industrial demand decelerated through the year,” stated Christopher L. Mapes, Chairman, President & CEO. “Extensive product launches, new acquisitions and expansions across our network of global tech centers demonstrate our industry leadership and investments in innovative, value-added solutions. While we manage this challenging portion of the cycle, we are well-positioned to capture growth and generate long-term value for our stakeholders. We are proud to celebrate our Company’s 125th anniversary during 2020 and Lincoln Electric thanks our customers, employees, investors and suppliers for their support in helping us reach this momentous milestone.”

Twelve Months 2019 Summary

Net income for the twelve months ended December 31, 2019 was $293.1 million, or $4.68 EPS. This compares with $287.1 million, or $4.37 EPS, in the comparable 2018 period. Reported EPS includes special item after-tax net charges of $1.5 million or $0.02 EPS, as compared with special item after-tax charges of $29.6 million, or $0.45 EPS in the prior year period. Excluding these items, adjusted net income for the twelve months ended December 31, 2019 was $294.6 million, or $4.70 EPS, compared with $316.6 million, or $4.82 EPS, in the comparable 2018 period. The effective tax rate was 20.5% for the twelve months ended December 31, 2019 as compared with 22.2% in the prior year period. Excluding special items, the adjusted effective tax rate was 21.9% in the 2019 and 2018 periods.

Sales decreased 0.8% to $3.0 billion in the twelve months ended December 31, 2019 from a 3.5% decrease in organic sales and 1.7% unfavorable foreign exchange, partially offset by a 4.3% benefit from acquisitions. Operating income for the twelve months ended December 31, 2019 was $370.9 million, or 12.4% of sales. This compares with operating income of $375.5 million, or 12.4% of sales, in the comparable 2018 period. Excluding special items, adjusted operating income was $387.9 million, or 12.9% of sales, as compared with $405.3 million, or 13.4% of sales, in the comparable 2018 period.

Share Repurchase Program

The Company's Board of Director's approved a new share repurchase program authorizing the Company to repurchase, in the aggregate, up to 10 million of its outstanding common stock. This authorization, in addition to the 2.8 million shares remaining from the prior program, may be used by the Company to repurchase shares on the open market or through privately negotiated transactions from time to time, depending on market conditions and subject to other factors.

Webcast Information

A conference call to discuss fourth quarter 2019 financial results will be webcast live today, February 13, 2020, at 10:00 a.m., Eastern Time. This webcast is accessible at https://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 6955179. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2019 can also be obtained at https://ir.lincolnelectric.com .

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment and has a leading global position in brazing and soldering alloys. Headquartered in Cleveland, Ohio, Lincoln has 59 manufacturing locations in 18 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 https://www.lincolnelectric.com .

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share Organic sales, Cash conversion 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 acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as 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, 2018.

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 December 31, Fav (Unfav) to
Prior Year
  2019 % of Sales 2018 % of Sales $ %
Net sales $736,307  100.0% $743,827  100.0% $(7,520) (1.0%)
Cost of goods sold 495,373  67.3% 493,528  66.3% (1,845) (0.4%)
Gross profit 240,934  32.7% 250,299  33.7% (9,365) (3.7%)
Selling, general & administrative expenses 149,381  20.3% 154,437  20.8% 5,056  3.3%
Rationalization and asset impairment charges 8,851  1.2% 932  0.1% (7,919) (849.7%)
Operating income 82,702  11.2% 94,930  12.8% (12,228) (12.9%)
Interest expense, net 5,794  0.8% 4,343  0.6% (1,451) (33.4%)
Other income (expense) 3,386  0.5% 3,868  0.5% (482) (12.5%)
Income before income taxes 80,294  10.9% 94,455  12.7% (14,161) (15.0%)
Income taxes 16,578  2.3% 7,676  1.0% (8,902) (116.0%)
Effective tax rate 20.6%   8.1%   (12.5%)  
Net income including non-controlling interests 63,716  8.7% 86,779  11.7% (23,063) (26.6%)
Non-controlling interests in subsidiaries’ loss     (60)   60  100.0%
Net income $63,716  8.7% $86,839  11.7% $(23,123) (26.6%)
             
Basic earnings per share $1.04    $1.36    $(0.32) (23.5%)
Diluted earnings per share $1.03    $1.35    $(0.32) (23.7%)
Weighted average shares (basic) 60,996    63,808       
Weighted average shares (diluted) 61,710    64,559       
               
               
  Twelve Months Ended December 31, Fav (Unfav) to
Prior Year
  2019 % of Sales 2018 % of Sales $ %
Net sales $3,003,272  100.0% $3,028,674  100.0% $(25,402) (0.8%)
Cost of goods sold 1,995,685  66.5% 2,000,153  66.0% 4,468  0.2%
Gross profit 1,007,587  33.5% 1,028,521  34.0% (20,934) (2.0%)
Selling, general & administrative expenses 621,489  20.7% 627,697  20.7% 6,208  1.0%
Rationalization and asset impairment charges 15,188  0.5% 25,285  0.8% 10,097  39.9%
Operating income 370,910  12.4% 375,539  12.4% (4,629) (1.2%)
Interest expense, net 23,415  0.8% 17,565  0.6% (5,850) (33.3%)
Other income (expense) 20,998  0.7% 10,686  0.4% 10,312  96.5%
Income before income taxes 368,493  12.3% 368,660  12.2% (167)  
Income taxes 75,410  2.5% 81,667  2.7% 6,257  7.7%
Effective tax rate 20.5%   22.2%   1.7%  
Net income including non-controlling interests 293,083  9.8% 286,993  9.5% 6,090  2.1%
Non-controlling interests in subsidiaries’ loss (26)   (73)   47  64.4%
Net income $293,109  9.8% $287,066  9.5% $6,043  2.1%
             
Basic earnings per share $4.73    $4.42    $0.31  7.0%
Diluted earnings per share $4.68    $4.37    $0.31  7.1%
Weighted average shares (basic) 61,960    64,886       
Weighted average shares (diluted) 62,658    65,682       


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data December 31, 2019 December 31, 2018
Cash and cash equivalents $199,563  $358,849 
Total current assets 1,075,581  1,237,799 
Property, plant and equipment, net 529,344  478,801 
Total assets 2,371,213  2,349,825 
Total current liabilities 563,135  538,182 
Short-term debt (1) 34,969  111 
Long-term debt, less current portion 712,302  702,549 
Total equity 819,077  887,592 
     
     
Operating Working Capital December 31, 2019 December 31, 2018
Accounts receivable, net $374,649  $396,885 
Inventories 393,748  361,829 
Trade accounts payable 273,002  268,600 
Operating working capital $495,395  $490,114 
     
Average operating working capital to Net sales (2) 16.8% 16.5%
     
     
Invested Capital December 31, 2019 December 31, 2018
Short-term debt (1) $34,969  $111 
Long-term debt, less current portion 712,302  702,549 
Total debt 747,271  702,660 
Total equity 819,077  887,592 
Invested capital $1,566,348  $1,590,252 
     
Total debt / invested capital 47.7% 44.2%


(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 December 31, Twelve Months Ended December 31,
  2019 2018 2019 2018
Operating income as reported $82,702  $94,930  $370,910  $375,539 
Special items (pre-tax):        
Rationalization and asset impairment charges (2) 8,851  932  15,188  25,285 
Acquisition transaction and integration costs (3)   833  1,804  4,498 
Amortization of step up in value of acquired inventories (4)     3,008   
Gains on asset disposals (5)     (3,045)  
Adjusted operating income (1) $91,553  $96,695  $387,865  $405,322 
As a percent of total sales 12.4% 13.0% 12.9% 13.4%
         
Net income as reported $63,716  $86,839  $293,109  $287,066 
Special items:        
Rationalization and asset impairment charges (2) 8,851  932  15,188  25,285 
Acquisition transaction and integration costs (3)   833  1,804  4,498 
Pension settlement charges (6)   1,696    6,686 
Amortization of step up in value of acquired inventories (4)     3,008   
Gains on asset disposals (5)     (3,554)  
Gain on change in control (7)     (7,601)  
Tax effect of Special items (8) (1,567) (6,764) (7,386) (6,896)
Adjusted net income (1) 71,000  83,536  294,568  316,639 
Non-controlling interests in subsidiaries’ loss   (60) (26) (73)
Interest expense, net 5,794  4,343  23,415  17,565 
Income taxes as reported 16,578  7,676  75,410  81,667 
Tax effect of Special items (8) 1,567  6,764  7,386  6,896 
Adjusted EBIT (1) $94,939  $102,259  $400,753  $422,694 
         
Effective tax rate as reported 20.6% 8.1% 20.5% 22.2%
Net special item tax impact (0.2%) 6.6% 1.4% (0.3%)
Adjusted effective tax rate (1) 20.4% 14.7% 21.9% 21.9%
         
Diluted earnings per share as reported $1.03  $1.35  $4.68  $4.37 
Special items per share 0.12  (0.06) 0.02  0.45 
Adjusted diluted earnings per share (1) $1.15  $1.29  $4.70  $4.82 
         
Weighted average shares (diluted) 61,710  64,559  62,658  65,682 


(1)Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate 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 and are included in Selling, general & administrative expenses.
(4)Related to the acquisitions of Baker Industries, Inc. and Kaynak Teknigi Sanayi ve Ticaret A.S. ("Askaynak") and are included in Cost of goods sold.
(5)Primarily included in Cost of goods sold.
(6)Related to lump sum pension payments and are included in Other income (expense).
(7)Related to the acquisition of Askaynak and is included in Other income (expense).
(8)Includes the net tax impact of Special items recorded during the respective periods, including tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended December 31, 2019. The prior year includes an adjustment to taxes on unremitted foreign earnings related to the U.S. Tax Act of $4,424 and $399 in the three and twelve months ended December 31, 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 December 31,
Return on Invested Capital 2019 2018
Net income as reported $293,109  $287,066 
Rationalization and asset impairment charges 15,188  25,285 
Acquisition transaction and integration costs 1,804  4,498 
Pension settlement charges   6,686 
Amortization of step up in value of acquired inventories 3,008   
Gains on asset disposals (3,554)  
Gain on change in control (7,601)  
Tax effect of Special items (3) (7,386) (6,896)
Adjusted net income (1) $294,568  $316,639 
Plus: Interest expense, net of tax of $6,477 and $6,117 in 2019 and 2018, respectively 19,465  18,386 
Less: Interest income, net of tax of $631 and $1,732 in 2019 and 2018, respectively 1,896  5,206 
Adjusted net income before tax-effected interest $312,137  $329,819 
     
     
Invested Capital December 31, 2019 December 31, 2018
Short-term debt $34,969  $111 
Long-term debt, less current portion 712,302  702,549 
Total debt 747,271  702,660 
Total equity 819,077  887,592 
Invested capital $1,566,348  $1,590,252 
     
Return on invested capital (1)(2) 19.9% 20.7%


(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 tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended December 31, 2019 and net charges of $399 related to the U.S. Tax Act in the twelve months ended December 31, 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 December 31,
  2019 2018
OPERATING ACTIVITIES:    
Net income $63,716  $86,839 
Non-controlling interests in subsidiaries’ loss   (60)
Net income including non-controlling interests 63,716  86,779 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment net charges (gains) 2,431  (4,570)
Depreciation and amortization 21,087  18,400 
Equity earnings in affiliates, net (161) (1,607)
Other non-cash items, net 12,203  427 
Changes in operating assets and liabilities, net of effects from acquisitions:    
Decrease in accounts receivable 26,291  21,431 
Decrease in inventories 24,453  17,629 
Increase in trade accounts payable 25,863  21,159 
Net change in other current assets and liabilities (51,294) (58,649)
Net change in other long-term assets and liabilities (2,070) (1,624)
NET CASH PROVIDED BY OPERATING ACTIVITIES 122,519  99,375 
     
INVESTING ACTIVITIES:    
Capital expenditures (16,064) (22,500)
Acquisition of businesses, net of cash acquired 2,018  (108,383)
Proceeds from sale of property, plant and equipment 18  6,170 
Proceeds from marketable securities   99,281 
Other investing activities   (2,000)
NET CASH USED BY INVESTING ACTIVITIES (14,028) (27,432)
     
FINANCING ACTIVITIES:    
Net change in borrowings 21,889  (296)
Proceeds from exercise of stock options 8,137  242 
Purchase of shares for treasury (70,751) (80,173)
Cash dividends paid to shareholders (28,758) (25,384)
NET CASH USED BY FINANCING ACTIVITIES (69,483) (105,611)
     
Effect of exchange rate changes on Cash and cash equivalents 3,943  (5,683)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,951  (39,351)
Cash and cash equivalents at beginning of period 156,612  398,200 
Cash and cash equivalents at end of period $199,563  $358,849 
     
Cash dividends paid per share $0.47  $0.39 


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Condensed Consolidated Statements of Cash Flows

  Twelve Months Ended December 31,
  2019 2018
OPERATING ACTIVITIES:    
Net income $293,109  $287,066 
Non-controlling interests in subsidiaries’ loss (26) (73)
Net income including non-controlling interests 293,083  286,993 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment net charges (gains) 3,500  (5,978)
Depreciation and amortization 81,487  72,346 
Equity earnings in affiliates, net (1,427) (3,034)
Gain on change in control (7,601)  
Other non-cash items, net 21,488  12,509 
Changes in operating assets and liabilities, net of effects from acquisitions:    
Decrease (increase) in accounts receivable 50,394  (4,061)
Increase in inventories (12,023) (23,904)
(Decrease) increase in trade accounts payable (8,339) 3,636 
Net change in other current assets and liabilities (16,954) (12,333)
Net change in other long-term assets and liabilities (423) 2,978 
NET CASH PROVIDED BY OPERATING ACTIVITIES 403,185  329,152 
     
INVESTING ACTIVITIES:    
Capital expenditures (69,615) (71,246)
Acquisition of businesses, net of cash acquired (134,717) (101,792)
Proceeds from sale of property, plant and equipment 9,509  16,755 
Purchase of marketable securities   (268,335)
Proceeds from marketable securities   447,459 
Other investing activities 2,000  (2,000)
NET CASH (USED BY) PROVIDED BY INVESTING ACTIVITIES (192,823) 20,841 
     
FINANCING ACTIVITIES:    
Net change in borrowings 24,322  (942)
Proceeds from exercise of stock options 14,347  4,690 
Purchase of shares for treasury (292,693) (201,650)
Cash dividends paid to shareholders (117,920) (102,058)
Other financing activities   (2,170)
NET CASH USED BY FINANCING ACTIVITIES (371,944) (302,130)
     
Effect of exchange rate changes on Cash and cash equivalents 2,296  (15,715)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (159,286) 32,148 
Cash and cash equivalents at beginning of period 358,849  326,701 
Cash and cash equivalents at end of period $199,563  $358,849 
     
Cash dividends paid per share $1.88  $1.56 


Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)

  Americas
Welding
 International
Welding
 The Harris
Products Group
 Corporate /
Eliminations
 Consolidated
Three months ended December 31, 2019        
Net sales $437,899  $218,606  $79,802  $  $736,307 
Inter-segment sales 28,042  4,853  1,650  (34,545)  
Total $465,941  $223,459  $81,452  $(34,545) $736,307 
           
Net income         $63,716 
As a percent of total sales         8.7%
           
EBIT (1) $75,006  $4,501  $8,886  $(2,305) $86,088 
As a percent of total sales 16.1% 2.0% 10.9%   11.7%
Special items charges (gains) (3)   7,081  1,770    8,851 
Adjusted EBIT (2) $75,006  $11,582  $10,656  $(2,305) $94,939 
As a percent of total sales 16.1% 5.2% 13.1%   12.9%
           
Three months ended December 31, 2018        
Net sales $455,217  $219,456  $69,154  $  $743,827 
Inter-segment sales 29,265  4,907  1,522  (35,694)  
Total $484,482  $224,363  $70,676  $(35,694) $743,827 
           
Net income         $86,839 
As a percent of total sales         11.7%
           
EBIT (1) $84,198  $11,371  $8,506  $(5,277) $98,798 
As a percent of total sales 17.4% 5.1% 12.0%   13.3%
Special items charges (gains) (4) 1,696  932    833  3,461 
Adjusted EBIT (2) $85,894  $12,303  $8,506  $(4,444) $102,259 
As a percent of total sales 17.7% 5.5% 12.0%   13.7%


(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 2019 reflect Rationalization and asset impairment charges of $7,081 in International Welding and $1,770 in The Harris Products Group.
(4)Special items in 2018 reflect pension settlement charges of $1,696 in Americas Welding, Rationalization and asset impairment charges of $932 in International Welding and acquisition transaction and integration costs of $833 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
Twelve months ended December 31, 2019        
Net sales $1,815,746  $854,376  $333,150  $  $3,003,272 
Inter-segment sales 123,342  17,691  7,487  (148,520)  
Total $1,939,088  $872,067  $340,637  $(148,520) $3,003,272 
           
Net income         $293,109 
As a percent of total sales         9.8%
           
EBIT (1) $312,604  $48,125  $43,931  $(12,752) $391,908 
As a percent of total sales 16.1% 5.5% 12.9%   13.0%
Special items charges (gains) (3) 3,115  2,156  1,770  1,804  8,845 
Adjusted EBIT (2) $315,719  $50,281  $45,701  $(10,948) $400,753 
As a percent of total sales 16.3% 5.8% 13.4%   13.3%
           
Twelve months ended December 31, 2018        
Net sales $1,806,514  $919,771  $302,389  $  $3,028,674 
Inter-segment sales 118,936  18,576  6,969  (144,481)  
Total $1,925,450  $938,347  $309,358  $(144,481) $3,028,674 
           
Net income         $287,066 
As a percent of total sales         9.5%
           
EBIT (1) $334,058  $28,988  $36,564  $(13,385) $386,225 
As a percent of total sales 17.3% 3.1% 11.8%   12.8%
Special items charges (gains) (4) 6,686  25,285    4,498  36,469 
Adjusted EBIT (2) $340,744  $54,273  $36,564  $(8,887) $422,694 
As a percent of total sales 17.7% 5.8% 11.8%   14.0%


(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 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding, $11,702 in International Welding and $1,770 in The Harris Products Group, amortization of step up in value of acquired inventories of $1,399 in Americas Welding and $1,609 in International Welding, gains on disposals of assets of $3,554 in International Welding, a gain on change in control of $7,601 related to the acquisition of Askaynak and acquisition transaction and integration costs of $1,804 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
(4)Special items in 2018 reflect pension settlement charges of $6,686 in Americas Welding, Rationalization and asset impairment charges of $25,285 in International Welding and acquisition transaction and integration costs of $4,498 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 December 31st Change in Net Sales by Segment
       
    Change in Net Sales due to:  
  Net Sales
2018
 Volume Acquisitions Price Foreign
Exchange
 Net Sales
2019
Operating Segments            
Americas Welding $455,217  $(29,529) $19,450  $(7,719) $480  $437,899 
International Welding 219,456  (17,076) 19,648  (760) (2,662) 218,606 
The Harris Products Group 69,154  3,925  4,836  2,276  (389) 79,802 
Consolidated $743,827  $(42,680) $43,934  $(6,203) $(2,571) $736,307 
             
% Change            
Americas Welding   (6.5%) 4.3% (1.7%) 0.1% (3.8%)
International Welding   (7.8%) 9.0% (0.3%) (1.2%) (0.4%)
The Harris Products Group   5.7% 7.0% 3.3% (0.6%) 15.4%
Consolidated   (5.7%) 5.9% (0.8%) (0.3%) (1.0%)
             
             
Twelve Months Ended December 31st Change in Net Sales by Segment
       
    Change in Net Sales due to:  
  Net Sales
2018
 Volume Acquisitions Price Foreign
Exchange
 Net Sales
2019
Operating Segments            
Americas Welding $1,806,514  $(79,285) $71,062  $25,705  $(8,250) $1,815,746 
International Welding 919,771  (71,509) 37,061  9,159  (40,106) 854,376 
The Harris Products Group 302,389  9,898  21,032  2,852  (3,021) 333,150 
Consolidated $3,028,674  $(140,896) $129,155  $37,716  $(51,377) $3,003,272 
             
% Change            
Americas Welding % (4.4%) 3.9% 1.4% (0.5%) 0.5%
International Welding   (7.8%) 4.0% 1.0% (4.4%) (7.1%)
The Harris Products Group   3.3% 7.0% 0.9% (1.0%) 10.2%
Consolidated   (4.7%) 4.3% 1.2% (1.7%) (0.8%)
             

lincoln logo.jpg

Source: Lincoln Electric Holdings, Inc.


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