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Lincoln Electric Reports Third Quarter 2014 Results

Oct 30 2014

Lincoln Electric Reports Third Quarter 2014 Results


Adjusted EPS increases 9% to $0.94

CLEVELAND, Oct. 30, 2014 /PRNewswire/ --

Third Quarter 2014 Highlights

  • Reported sales increased 3.5% to $716 million; up 5.8% excluding unfavorable foreign exchange translation
  • Operating income of $76 million, or 10.6% of sales, includes rationalization and asset impairment charges of $29 million
  • Adjusted operating income increased 3.7% to $105 million, or 14.7% of sales
  • Cash flows from operations up 10.7% to $268 million on a year-to-date basis
  • Returned $148 million to shareholders and significantly increased share repurchase program

 

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported third quarter 2014 net income of $45.7 million, or $0.57 per diluted share, which includes rationalization and asset impairment charges of $29.1 million.  This compares with net income of $66.0 million, or $0.80 per diluted share, in the comparable 2013 period.  Adjusted net income was $74.9 million, or $0.94 per diluted share, compared to adjusted net income of $71.1 million, or $0.86 per diluted share, in the comparable 2013 period.

Sales increased 3.5% to $715.8 million in the third quarter 2014 versus $691.9 million in the comparable 2013 period.  Operating income for the third quarter decreased 20.0% to $76.1 million, or 10.6% of sales, from $95.2 million, or 13.8% of sales, in the comparable 2013 period.  Adjusted operating income increased 3.7% to $105.2 million or 14.7% of sales, compared with $101.5 million, or 14.7% of sales in 2013.

Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.1 million.  These non-cash asset impairment charges primarily related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $3.4 million primarily representing a gain on the sale of real estate.  These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased with the underlying quality of our earnings this quarter, which were driven by strong top-line growth and margin contributions from our North America Welding and Europe Welding segments.  This performance more than offset a challenging year-over-year comparison from our Venezuela business.  Looking ahead, improving end market trends and demand for our innovative solutions combined with benefits from our strategic initiatives and accelerated returns, position us well to continue to deliver value to all of our stakeholders."

Dividend and Share Repurchases

The Company's Board of Directors declared a 26% increase in the quarterly cash dividend, from $0.23 per share to $0.29, or to $1.16 per share on an annualized basis.  The declared quarterly cash dividend of $0.29 per share is payable January 15, 2015 to shareholders of record as of December 31, 2014.

During the quarter, the Company returned $130.1 million to shareholders through the repurchase of 1,867,204 of the Company's common shares.  The Company has now increased its 2014 share repurchase target to $300 million of the Company's common shares.  

Nine Months 2014 Summary

Net income for the nine months ended September 30, 2014 was $179.5 million, or $2.22 per diluted share, which includes rationalization and asset impairment charges of $29.9 million and charges of $21.1 million from Venezuelan foreign exchange remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter.  This compares with net income of $205.5 million, or $2.47 per diluted share, in 2013.  Adjusted net income was $230.5 million, or $2.86 per diluted share, compared to adjusted net income of $224.0 million, or $2.69 per diluted share, in 2013.  Adjusted net income for the nine months ended September 30, 2014 includes earnings of $0.17 per diluted share from the Company's Venezuelan operations as compared to $0.24 per diluted share in the comparable 2013 period. 

Sales remained relatively steady at $2.1 billion in the nine months ended September 30, 2014 and the comparable 2013 period.  This result reflects lower volumes and unfavorable foreign exchange translation being offset by pricing actions and acquisitions.  Operating income for the nine months ended September 30, 2014 decreased to $268.8 million, or 12.6% of sales, compared to $288.1 million, or 13.5% of sales, in the comparable 2013 period.  Adjusted operating income increased 3.7% to $319.9 million or 15.0% of sales, compared with $308.5 million, or 14.4% of sales in 2013.  Operating income and Adjusted operating income include a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.

Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.9 million.  Charges consist of non-cash asset impairment charges related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $2.5 million primarily representing a gain on the sale of real estate.  These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.

Webcast Information

A conference call to discuss third quarter 2014 financial results will be webcast live today, Thursday, October 30, 2014, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://ir.lincolnelectric.com.  Listeners should go to the web site prior to the call to register and download and install any necessary audio software.  A replay of the webcast will be available on the Company's web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 17603361.  Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the third quarter 2014 can also be obtained at http://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market.  Headquartered in Cleveland, Ohio, Lincoln has 48 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.  For more information about Lincoln Electric and its products and services, visit the Company's website at http://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company's financial performance from period to period.  Management uses this information in assessing and evaluating the Company's underlying operating performance.  Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.  Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures.

Forward-Looking Statements

The Company's expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements reflect management's current expectations and involve a number of risks and uncertainties.  Forward-looking statements generally can be identified by the use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "forecast," "guidance" or words of similar meaning.  Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company's operating results.  The factors include, but are not limited to: general economic and market conditions; the effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations, including in highly inflationary countries such as Venezuela; adverse outcome of pending or potential litigation; actual costs of the Company's rationalization plans; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, on the Company or its customers, suppliers and the economy in general.  For additional discussion, see "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K.

 

 

 

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



2014



% of Sales


2013



% of Sales


$


%

Net sales


$

715,777



100.0

%


$

691,875



100.0

%


$

23,902



3.5

%

Cost of goods sold


474,168



66.2

%


459,178



66.4

%


(14,990)



(3.3)

%

Gross profit


241,609



33.8

%


232,697



33.6

%


8,912



3.8

%

Selling, general & administrative expenses


136,424



19.1

%


131,217



19.0

%


(5,207)



(4.0)

%

Rationalization and asset impairment charges


29,068



4.1

%


6,302



0.9

%


(22,766)



(361.3)

%

Operating income


76,117



10.6

%


95,178



13.8

%


(19,061)



(20.0)

%

Interest income


627



0.1

%


536



0.1

%


91



17.0

%

Equity earnings in affiliates


1,172



0.2

%


1,170



0.2

%


2



0.2

%

Other income


1,043



0.1

%


1,514



0.2

%


(471)



(31.1)

%

Interest expense


(1,174)



(0.2)

%


(558)



(0.1)

%


(616)



(110.4)

%

Income before income taxes


77,785



10.9

%


97,840



14.1

%


(20,055)



(20.5)

%

Income taxes


32,953



4.6

%


33,588



4.9

%


635



1.9

%

Effective tax rate


42.4

%





34.3

%





(8.1)

%




Net income including non-controlling interests


44,832



6.3

%


64,252



9.3

%


(19,420)



(30.2)

%

Non-controlling interests in subsidiaries' loss


(857)



(0.1)

%


(1,792)



(0.3)

%


935



52.2

%

Net income


$

45,689



6.4

%


$

66,044



9.5

%


$

(20,355)



(30.8)

%




















Basic earnings per share


$

0.58






$

0.81






$

(0.23)



(28.4)

%

Diluted earnings per share


$

0.57






$

0.80






$

(0.23)



(28.8)

%

Weighted average shares (basic)


78,817






81,644











Weighted average shares (diluted)


79,725






82,707
































Nine months ended September 30,


Fav (Unfav) to Prior Year



2014



% of Sales


2013



% of Sales


$


%

Net sales


$

2,129,370



100.0

%


$

2,137,880



100.0

%


$

(8,510)



(0.4)

%

Cost of goods sold


1,411,158



66.3

%


1,438,273



67.3

%


27,115



1.9

%

Gross profit


718,212



33.7

%


699,607



32.7

%


18,605



2.7

%

Selling, general & administrative expenses


419,495



19.7

%


403,323



18.9

%


(16,172)



(4.0)

%

Rationalization and asset impairment charges


29,887



1.4

%


8,204



0.4

%


(21,683)



(264.3)

%

Operating income


268,830



12.6

%


288,080



13.5

%


(19,250)



(6.7)

%

Interest income


2,465



0.1

%


2,452



0.1

%


13



0.5

%

Equity earnings in affiliates


4,308



0.2

%


3,687



0.2

%


621



16.8

%

Other income


3,204



0.2

%


3,141



0.1

%


63



2.0

%

Interest expense


(3,730)



(0.2)

%


(2,307)



(0.1)

%


(1,423)



(61.7)

%

Income before income taxes


275,077



12.9

%


295,053



13.8

%


(19,976)



(6.8)

%

Income taxes


96,532



4.5

%


91,431



4.3

%


(5,101)



(5.6)

%

Effective tax rate


35.1

%





31.0

%





(4.1)

%




Net income including non-controlling interests


178,545



8.4

%


203,622



9.5

%


(25,077)



(12.3)

%

Non-controlling interests in subsidiaries' loss


(929)





(1,834)



(0.1)

%


905



49.3

%

Net income


$

179,474



8.4

%


$

205,456



9.6

%


$

(25,982)



(12.6)

%




















Basic earnings per share


$

2.25






$

2.50






$

(0.25)



(10.0)

%

Diluted earnings per share


$

2.22






$

2.47






$

(0.25)



(10.1)

%

Weighted average shares (basic)


79,779






82,260











Weighted average shares (diluted)


80,702






83,314











 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 


Non-GAAP Financial Measures






Three months ended September 30,



Nine months ended September 30,




2014



2013



2014



2013


Operating income as reported


$

76,117



$

95,178



$

268,830



$

288,080


Special items (pre-tax):













Rationalization and asset impairment charges (1)


29,068



6,302



29,887



8,204


Venezuela foreign exchange losses (2)






21,133



12,198


Adjusted operating income (4)


$

105,185



$

101,480



$

319,850



$

308,482















Net income as reported


$

45,689



$

66,044



$

179,474



$

205,456


Special items (after-tax):













Rationalization and asset impairment charges (1)


30,056



6,098



30,747



7,350


Venezuela foreign exchange losses (2)






21,133



12,198


Special items attributable to non-controlling

interests (3)


(805)



(1,021)



(805)



(1,021)


Adjusted net income (4)


$

74,940



$

71,121



$

230,549



$

223,983















Diluted earnings per share as reported


$

0.57



$

0.80



$

2.22



$

2.47


Special items


0.37



0.06



0.64



0.22


Adjusted diluted earnings per share (4)


$

0.94



$

0.86



$

2.86



$

2.69















Weighted average shares (diluted)


79,725



82,707



80,702



83,314


 

(1)

The three and nine months ended September 30, 2014 include a non-cash asset impairment charge of $32.4 million partially offset by net rationalization gains including a gain on the sale of real estate.  The three and nine months ended September 30, 2013 include net charges associated with long-lived asset impairments and severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets at rationalized operations.

(2)

The nine months ended September 30, 2014 represents the impact of the Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism in the first quarter.  The nine months ended September 30, 2013 represents the impact of the devaluation of the Venezuelan currency.

(3)

Represents the portion of special items attributable to non-controlling interests.

(4)

Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company's financial performance from period to period.  Management uses this information in assessing and evaluating the Company's underlying operating performance.  Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.

 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands)

(Unaudited)

 

Balance Sheet Highlights


Selected Consolidated Balance Sheet Data


September 30, 2014


December 31, 2013

Cash and cash equivalents


$

279,523



$

299,825


Total current assets


1,209,836



1,130,775


Property, plant and equipment, net


450,016



484,005


Total assets


2,112,519



2,151,867


Total current liabilities


571,701



456,917


Short-term debt (1)


87,501



15,296


Long-term debt


1,041



3,791


Total equity


1,376,479



1,530,688









Net Operating Working Capital


September 30, 2014


December 31, 2013

Accounts receivable


$

354,376



$

367,134


Inventory


337,197



349,963


Trade accounts payable


186,751



212,799


Net operating working capital


$

504,822



$

504,298









Net operating working capital to net sales (2)


17.6

%


17.6

%








Invested Capital


September 30, 2014


December 31, 2013

Short-term debt (1)


$

87,501



$

15,296


Long-term debt


1,041



3,791


Total debt


88,542



19,087


Total equity


1,376,479



1,530,688


Invested capital


$

1,465,021



$

1,549,775









Total debt / invested capital


6.0

%


1.2

%

Return on invested capital (3)


18.3

%


18.9

%

 

(1)

Includes current portion of long-term debt.

(2)

Net operating working capital to net sales is defined as net operating working capital divided by annualized rolling three months of sales.

(3)

Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest divided by invested capital.

 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited) 

 


Condensed Consolidated Statements of Cash Flows






Three months ended September 30,




2014



2013


OPERATING ACTIVITIES:







Net income


$

45,689



$

66,044


Non-controlling interests in subsidiaries' loss


(857)



(1,792)


Net income including non-controlling interests


44,832



64,252


Adjustments to reconcile Net income including non-controlling interests to Net cash

   provided by operating activities:







Rationalization and asset impairment charges


28,588



4,695


Depreciation and amortization


17,117



17,326


Equity earnings in affiliates, net


(404)



(431)


Pension expense


4,158



7,326


Pension contributions and payments


(10,479)



(3,066)


Other non-cash items, net


9,382



5,421


Changes in operating assets and liabilities, net of effects from acquisitions:







Decrease in accounts receivable


20,953



25,385


Decrease in inventories


6,302



2,419


Increase (decrease) in trade accounts payable


3,915



(20,863)


Net change in other current assets and liabilities


25,919



50,006


Net change in other long-term assets and liabilities


(835)



2,570


NET CASH PROVIDED BY OPERATING ACTIVITIES


149,448



155,040









INVESTING ACTIVITIES:







Capital expenditures


(15,483)



(28,643)


Acquisition of businesses, net of cash acquired




(260)


Proceeds from sale of property, plant and equipment


11,537



204


NET CASH USED BY INVESTING ACTIVITIES


(3,946)



(28,699)









FINANCING ACTIVITIES:







Net change in borrowings


81,257



404


Proceeds from exercise of stock options


1,935



2,873


Excess tax benefits from stock-based compensation


883



1,508


Purchase of shares for treasury


(130,070)



(43,964)


Cash dividends paid to shareholders


(18,276)



(16,407)


NET CASH USED BY FINANCING ACTIVITIES


(64,271)



(55,586)









Effect of exchange rate changes on Cash and cash equivalents


(5,993)



3,165


INCREASE IN CASH AND CASH EQUIVALENTS


75,238



73,920


Cash and cash equivalents at beginning of period


204,285



256,389


Cash and cash equivalents at end of period


$

279,523



$

330,309









Cash dividends paid per share


$

0.23



$

0.20


 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Condensed Consolidated Statements of Cash Flows

 


Condensed Consolidated Statements of Cash Flows






Nine months ended September 30,




2014



2013


OPERATING ACTIVITIES:







Net income


$

179,474



$

205,456


Non-controlling interests in subsidiaries' loss


(929)



(1,834)


Net income including non-controlling interests


178,545



203,622


Adjustments to reconcile Net income including non-controlling interests to Net cash

   provided by operating activities:







Rationalization and asset impairment charges


29,447



5,049


Depreciation and amortization


53,017



51,881


Equity earnings in affiliates, net


(1,901)



(1,313)


Pension expense


9,634



22,261


Pension contributions and payments


(34,643)



(84,417)


Other non-cash items, net


30,041



29,757


Changes in operating assets and liabilities, net of effects from acquisitions:







Increase in accounts receivable


(22,388)



(17,982)


Increase in inventories


(11,153)



(9,889)


Decrease in trade accounts payable


(11,534)



(32,703)


Net change in other current assets and liabilities


53,299



75,627


Net change in other long-term assets and liabilities


(4,311)



198


NET CASH PROVIDED BY OPERATING ACTIVITIES


268,053



242,091









INVESTING ACTIVITIES:







Capital expenditures


(55,430)



(59,691)


Acquisition of businesses, net of cash acquired


(892)



(4,936)


Proceeds from sale of property, plant and equipment


17,046



796


Other investing activities


778



(4,217)


NET CASH USED BY INVESTING ACTIVITIES


(38,498)



(68,048)









FINANCING ACTIVITIES:







Net change in borrowings


71,114



(2,351)


Proceeds from exercise of stock options


5,945



16,077


Excess tax benefits from stock-based compensation


3,361



6,973


Purchase of shares for treasury


(249,403)



(113,641)


Cash dividends paid to shareholders


(55,395)



(32,987)


Transactions with non-controlling interests


(2,330)



(2,809)


NET CASH USED BY FINANCING ACTIVITIES


(226,708)



(128,738)









Effect of exchange rate changes on Cash and cash equivalents


(23,149)



(1,460)


(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(20,302)



43,845


Cash and cash equivalents at beginning of period


299,825



286,464


Cash and cash equivalents at end of period


$

279,523



$

330,309









Cash dividends paid per share


$

0.69



$

0.40


 

 

 

 

Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)

 



North

America

Welding


Europe

Welding


Asia Pacific

Welding


South

America

Welding


The Harris

Products

Group


Corporate /

Eliminations


Consolidated

Three months ended September 30, 2014




















Net sales


$

439,621



$

107,507



$

57,404



$

32,862



$

78,383



$



$

715,777


Inter-segment sales


30,365



4,533



3,595



9



2,009



(40,511)




Total


$

469,986



$

112,040



$

60,999



$

32,871



$

80,392



$

(40,511)



$

715,777
























EBIT (1)


$

84,450



$

15,302



$

(28,871)



$

(1,172)



$

8,947



$

(324)



$

78,332


As a percent of total sales


18.0

%


13.7

%


(47.3)

%


(3.6)

%


11.1

%





10.9

%

Special items (gain) charge (2)


$



$

(81)



$

28,567



$

582



$



$



$

29,068


EBIT, as adjusted (4)


$

84,450



$

15,221



$

(304)



$

(590)



$

8,947



$

(324)



$

107,400


As a percent of total sales


18.0

%


13.6

%


(0.5)

%


(1.8)

%


11.1

%





15.0

%

Three months ended September 30, 2013




















Net sales


$

404,113



$

98,522



$

63,834



$

51,715



$

73,691



$



$

691,875


Inter-segment sales


35,355



5,256



3,821



151



2,311



(46,894)




Total


$

439,468



$

103,778



$

67,655



$

51,866



$

76,002



$

(46,894)



$

691,875
























EBIT (1)


$

75,242



$

6,286



$

(5,703)



$

15,942



$

6,917



$

(822)



$

97,862


As a percent of total sales


17.1

%


6.1

%


(8.4)

%


30.7

%


9.1

%





14.1

%

Special items (gain) charge (3)


$

(17)



$

1,595



$

4,724



$



$



$



$

6,302


EBIT, as adjusted (4)


$

75,225



$

7,881



$

(979)



$

15,942



$

6,917



$

(822)



$

104,164


As a percent of total sales


17.1

%


7.6

%


(1.4)

%


30.7

%


9.1

%





15.1

%

Nine months ended September 30, 2014




















Net sales


$

1,271,017



$

328,487



$

185,687



$

115,906



$

228,273



$



$

2,129,370


Inter-segment sales


96,668



15,887



11,644



73



6,389



(130,661)




Total


$

1,367,685



$

344,374



$

197,331



$

115,979



$

234,662



$

(130,661)



$

2,129,370
























EBIT (1)


$

247,077



$

38,489



$

(29,029)



$

(5,545)



$

22,183



$

3,167



$

276,342


As a percent of total sales


18.1

%


11.2

%


(14.7)

%


(4.8)

%


9.5

%





13.0

%

Special items (gain) charge (2)


$

(68)



$

923



$

28,450



$

21,715



$



$



$

51,020


EBIT, as adjusted (4)


$

247,009



$

39,412



$

(579)



$

16,170



$

22,183



$

3,167



$

327,362


As a percent of total sales


18.1

%


11.4

%


(0.3)

%


13.9

%


9.5

%





15.4

%

Nine months ended September 30, 2013




















Net sales


$

1,242,736



$

317,674



$

203,112



$

132,592



$

241,766



$



$

2,137,880


Inter-segment sales


99,869



13,865



12,579



222



7,209



(133,744)




Total


$

1,342,605



$

331,539



$

215,691



$

132,814



$

248,975



$

(133,744)



$

2,137,880
























EBIT (1)


$

233,553



$

26,450



$

(3,464)



$

19,921



$

21,411



$

(2,963)



$

294,908


As a percent of total sales


17.4

%


8.0

%


(1.6)

%


15.0

%


8.6

%





13.8

%

Special items (gain) charge (3)


$

1,109



$

1,664



$

5,431



$

12,198



$



$



$

20,402


EBIT, as adjusted (4)


$

234,662



$

28,114



$

1,967



$

32,119



$

21,411



$

(2,963)



$

315,310


As a percent of total sales


17.5

%


8.5

%


0.9

%


24.2

%


8.6

%





14.7

%

 

(1)

EBIT is defined as Operating income plus Equity earnings in affiliates and Other income.

(2)

Special items in the three and nine months ended September 30, 2014 include non-cash asset impairment charges partially offset by net rationalization gains including a gain on the sale of real estate.  Special items in the nine months ended September 30, 2014 also include the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. 

(3)

Special items in the three and nine months ended September 30, 2013 include net rationalization and asset impairment charges and the impact of the devaluation of the Venezuelan currency.

(4)

The primary profit measure used by management to assess segment performance is EBIT, as adjusted.  EBIT for each operating segment is adjusted for special items to derive EBIT, as adjusted.

 

 

 

 

Lincoln Electric Holdings, Inc.

Change in Net Sales by Segment

(In thousands)

(Unaudited)

 


Three Months Ended September 30th Change in Net Sales by Segment















Change in Net Sales due to:






Net Sales

2013



Volume


Acquisitions


Price


Foreign

Exchange


Net Sales

2014


Operating Segments



















North America Welding


$

404,113



$

23,208



$

9,917



$

4,670



$

(2,287)



$

439,621


Europe Welding


98,522



12,340





(1,048)



(2,307)



107,507


Asia Pacific Welding


63,834



(7,000)





932



(362)



57,404


South America Welding


51,715



(20,858)





13,155



(11,150)



32,862


The Harris Products Group


73,691



5,432





(709)



(31)



78,383


Consolidated


$

691,875



$

13,122



$

9,917



$

17,000



$

(16,137)



$

715,777


% Change



















North America Welding





5.7

%


2.5

%


1.2

%


(0.6)

%


8.8

%

Europe Welding





12.5

%




(1.1)

%


(2.3)

%


9.1

%

Asia Pacific Welding





(11.0)

%




1.5

%


(0.6)

%


(10.1)

%

South America Welding





(40.3)

%




25.4

%


(21.6)

%


(36.5)

%

The Harris Products Group





7.4

%




(1.0)

%




6.4

%

Consolidated





1.9

%


1.4

%


2.5

%


(2.3)

%


3.5

%







































Nine Months Ended September 30th Change in Net Sales by Segment















Change in Net Sales due to:






Net Sales

2013



Volume


Acquisitions


Price


Foreign

Exchange


Net Sales

2014


Operating Segments



















North America Welding


$

1,242,736



$

(996)



$

26,248



$

10,345



$

(7,316)



$

1,271,017


Europe Welding


317,674



10,263





(2,810)



3,360



328,487


Asia Pacific Welding


203,112



(12,650)





977



(5,752)



185,687


South America Welding


132,592



(31,654)





43,565



(28,597)



115,906


The Harris Products Group


241,766



1,848





(14,484)



(857)



228,273


Consolidated


$

2,137,880



$

(33,189)



$

26,248



$

37,593



$

(39,162)



$

2,129,370


% Change



















North America Welding





(0.1)

%


2.1

%


0.8

%


(0.6)

%


2.3

%

Europe Welding





3.2

%




(0.9)

%


1.1

%


3.4

%

Asia Pacific Welding





(6.2)

%




0.5

%


(2.8)

%


(8.6)

%

South America Welding





(23.9)

%




32.9

%


(21.6)

%


(12.6)

%

The Harris Products Group





0.8

%




(6.0)

%


(0.4)

%


(5.6)

%

Consolidated





(1.6)

%


1.2

%


1.8

%


(1.8)

%


(0.4)

%

 

SOURCE Lincoln Electric Holdings, Inc.

Amanda Butler, Director, Investor Relations, Tel: 216.383.2534, Email: Amanda_Butler@lincolnelectric.com