Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 23, 2018
 
LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
0-1402
(Commission File Number)
 
Ohio
 
34-1860551
(State or other jurisdiction of
incorporation)
 
(I.R.S. Employer Identification No.)
 
22801 St. Clair Avenue, Cleveland, Ohio 44117
(Address of principal executive offices, with zip code)
 
(216) 481-8100
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 






Item 2.02
 
Results of Operations and Financial Condition.
 
 
On July 23, 2018, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended June 30, 2018.  A copy of the Company’s press release issued on July 23, 2018 is attached hereto as Exhibit 99.1 and incorporated herein by reference.  The press release is also available through the Company’s website at www.lincolnelectric.com.  The information in this Current Report on Form 8-K, including the Exhibit, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
 
 
 
 
Item 9.01
 
Financial Statements and Exhibits.
 
 
 
 
 
(d) Exhibits
 
 
 
 
 
99.1  The Company’s press release dated July 23, 2018.






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
LINCOLN ELECTRIC HOLDINGS, INC.
 
 
 
 
 
/s/ Vincent K. Petrella
 
 
Vincent K. Petrella
 
 
Executive Vice President, Chief Financial Officer and Treasurer
 
 
(principal financial officer)
 
 
July 23, 2018

















































LINCOLN ELECTRIC HOLDINGS, INC.
 
INDEX TO EXHIBITS
 
 
 
 
Exhibit No.
 
Exhibit
 
 
 
 
The Company’s press release dated July 23, 2018.
 
 
 




Exhibit
Lincoln Electric Reports Second Quarter 2018 Financial Results


Exhibit 99.1
 
Investor Relations: Amanda Butler (216) 383-2534
Amanda_Butler@lincolnelectric.com

LINCOLN ELECTRIC REPORTS SECOND QUARTER 2018 RESULTS
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, Monday, July 23, 2018 -- 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.







Lincoln Electric Reports Second Quarter 2018 Financial Results



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.




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
(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
%