News Release

Lincoln Electric Reports Fourth Quarter and Full Year 2016 Results

Lincoln Electric Reports Fourth Quarter and Full Year 2016 Results



Fourth Quarter and Full Year 2016 Highlights
 ●  Fourth quarter EPS of $0.81; Full year 2016 EPS of $2.91 and Adjusted EPS of $3.29
 ●  Fourth quarter operating income margin resilient at 14.7%
 ●  Record average operating working capital to net sales ratio of 15.6%
 ●  Solid cash flow from operations and over 100% cash conversion of net income1 in fourth quarter and full year 2016
 ●  Returned $429 million to shareholders in 2016 through dividends and share repurchases

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

CLEVELAND, Feb. 14, 2017 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq:LECO) today reported fourth quarter 2016 net income of $53.4 million, or diluted earnings per share (EPS) of $0.81. This compares with net income of $48.7 million or $0.68 EPS in the comparable 2015 period which included after-tax special item charges of $5.1 million, or $0.07 per diluted share. On an adjusted basis, net income for fourth quarter 2015 was $53.8 million, or $0.75 EPS. 

Fourth quarter 2016 sales decreased 0.7% to $563.8 million as a 1.3% benefit from acquisitions and a 0.1% increase in price was offset by 1.3% lower volumes and a 0.8% unfavorable impact from foreign exchange translation. Excluding Venezuela from prior year results due to the deconsolidation of the operation, sales were flat as 0.6% lower volumes and a 0.8% unfavorable impact from foreign exchange were offset by a 1.3% benefit from acquisitions.

Operating income for the fourth quarter 2016 was $83.1 million, or 14.7% of sales, reflecting favorable mix and lower operating costs. This compares with operating income of $78.4 million, or 13.8% of sales, in the comparable 2015 period which included special items charges of $7.5 million related to pension settlement, Venezuelan currency remeasurement and rationalization. On an adjusted basis, fourth quarter 2015 operating income was $86.0 million or 15.1% of sales.

"We finished the year with steady demand trends, solid margin and cash flow performance, and record working capital efficiency in the business," stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. "Strong execution of our ‘2020 Strategy' initiatives continues to improve Lincoln's performance through the cycle and I am confident that our focus on innovation, operational excellence and investment returns will position us well to capitalize on growth as conditions improve in our global markets."

Twelve Months 2016 Summary

Net income for the twelve months ended December 31, 2016 was $198.4 million, or EPS of $2.91, which includes an after-tax special item benefit of $7.2 million, or $0.11 EPS, due to the reversal of an income tax valuation allowance, offset by a $33.3 million after-tax charge, or $0.49 EPS, from the deconsolidation of the Venezuelan subsidiary. This compares with net income of $127.5 million, or EPS of $1.70, in the comparable 2015 period. Adjusted net income for the twelve months ended December 31, 2016 was $224.5 million, or adjusted EPS of $3.29, compared with adjusted net income of $260.2 million, or adjusted EPS of $3.48, in 2015.

Sales decreased 10.3% to $2.3 billion in the twelve months ended December 31, 2016 due to 12.8% unfavorable foreign exchange translation and 9.8% lower volumes, offset by 10.2% higher pricing and a 2.0% increase from acquisitions. This compares with $2.5 billion in sales in the comparable 2015 period.  Excluding Venezuela from prior year results, sales decreased 7.6%, primarily from lower volumes. Operating income was $288.3 million, or 12.7% of sales, as compared with $181.7 million, or 7.2% of sales, in the comparable 2015 period. Adjusted operating income was $322.6 million or 14.2% of sales, compared with $371.6 million, or 14.7% of sales in 2015.

Venezuela Deconsolidation

Effective June 30, 2016, the Company deconsolidated the financial results of its Venezuela subsidiary and began reporting its results using the cost method of accounting. As a result, Venezuelan financial results are no longer included in the consolidated financial statements starting in the third quarter of 2016. Fourth quarter 2015 Venezuela financial performance included Net sales of $3.7 million, Net loss of $ 0.9 million and Adjusted net loss of $0.2 million. For 2015, Venezuela financial performance included Net sales of $84.7 million, Net loss of $24.0 million and Adjusted net income of $3.2 million.

Dividend and Share Repurchases

The Company's Board of Directors declared a 9.4% increase in the quarterly cash dividend, from $0.32 per share to $0.35, or $1.40 per share on an annual basis, which was paid on January 13, 2017 to shareholders of record as of December 31, 2016.

During the fourth quarter, the Company returned $74.6 million to shareholders through dividends and the repurchase of 0.8 million of the Company's common shares. During 2016, the Company returned $429.3 million to shareholders through dividends and the repurchase of 5.9 million of the Company's common shares.

Financing Activities
           
On October 20, 2016, the Company issued Senior Unsecured Notes (the "2016 Notes") in the aggregate principal amount of $350 million through a private placement. The 2016 Notes have maturities ranging from 12 to 25 years with a weighted average effective interest rate of 3.1% and a weighted average term of 18 years. The proceeds are being used for general corporate purposes.

Webcast Information

A conference call to discuss fourth quarter 2016 financial results will be webcast live today, February 14, 2017, at 10:00 a.m., Eastern Time. This webcast is accessible at http://ir.lincolnelectric.com. Listeners should go to the web site prior to the call to register, download and install any necessary audio software. A replay of the webcast will be available on the Company's web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 50963897. Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2016 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 47 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 www.lincolnelectric.com.

Non-GAAP Financial Information

Adjusted operating income, 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; 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 for the year ended December 31, 2015 and on Form 10-Q for the quarter ended June 30, 2016.

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
    2016   % of Sales   2015   % of Sales   $   %
Net sales   $ 563,828     100.0 %   $ 567,985     100.0 %   $ (4,157 )   (0.7 %)
Cost of goods sold   366,371     65.0 %   371,906     65.5 %   5,535     1.5 %
Gross profit   197,457     35.0 %   196,079     34.5 %   1,378     0.7 %
Selling, general & administrative expenses   114,386     20.3 %   110,803     19.5 %   (3,583 )   (3.2 %)
Rationalization and asset impairment charges           434     0.1 %   434     100.0 %
Pension settlement charges           6,407     1.1 %   6,407     100.0 %
Operating income   83,071     14.7 %   78,435     13.8 %   4,636     5.9 %
Interest income   867     0.2 %   691     0.1 %   176     25.5 %
Equity earnings in affiliates   844     0.1 %   877     0.2 %   (33 )   (3.8 %)
Other income   621     0.1 %   959     0.2 %   (338 )   (35.2 %)
Interest expense   (7,251 )   (1.3 %)   (9,790 )   (1.7 %)   2,539     25.9 %
Income before income taxes   78,152     13.9 %   71,172     12.5 %   6,980     9.8 %
Income taxes   24,751     4.4 %   22,473     4.0 %   (2,278 )   (10.1 %)
Effective tax rate   31.7 %       31.6 %       (0.1 %)    
Net income including non-controlling interests   53,401     9.5 %   48,699     8.6 %   4,702     9.7 %
Non-controlling interests in subsidiaries' income (loss)   6         7         (1 )   (14.3 %)
Net income   $ 53,395     9.5 %   $ 48,692     8.6 %   $ 4,703     9.7 %
                         
Basic earnings per share   $ 0.81         $ 0.68         $ 0.13     19.1 %
Diluted earnings per share   $ 0.81         $ 0.68         $ 0.13     19.1 %
Weighted average shares (basic)   65,603         71,446              
Weighted average shares (diluted)   66,303         72,121              
    Twelve months ended December 31,   Fav (Unfav) to Prior Year
    2016   % of Sales   2015   % of Sales   $   %
Net sales   $ 2,274,614     100.0 %   $ 2,535,791     100.0 %   $ (261,177 )   (10.3 %)
Cost of goods sold   1,485,316     65.3 %   1,694,647     66.8 %   209,331     12.4 %
Gross profit   789,298     34.7 %   841,144     33.2 %   (51,846 )   (6.2 %)
Selling, general & administrative expenses   466,676     20.5 %   496,748     19.6 %   30,072     6.1 %
Rationalization and asset impairment charges           19,958     0.8 %   19,958     100.0 %
Pension settlement charges           142,738     5.6 %   142,738     100.0 %
Loss on deconsolidation of Venezuelan subsidiary   34,348     1.5 %           (34,348 )   (100.0 %)
Operating income   288,274     12.7 %   181,700     7.2 %   106,574     58.7 %
Interest income   2,092     0.1 %   2,714     0.1 %   (622 )   (22.9 %)
Equity earnings in affiliates   2,928     0.1 %   3,015     0.1 %   (87 )   (2.9 %)
Other income   3,173     0.1 %   4,182     0.2 %   (1,009 )   (24.1 %)
Interest expense   (19,079 )   (0.8 %)   (21,824 )   (0.9 %)   2,745     12.6 %
Income before income taxes   277,388     12.2 %   169,787     6.7 %   107,601     63.4 %
Income taxes   79,015     3.5 %   42,375     1.7 %   (36,640 )   (86.5 %)
Effective tax rate   28.5 %       25.0 %       (3.5 %)    
Net income including non-controlling interests   198,373     8.7 %   127,412     5.0 %   70,961     55.7 %
Non-controlling interests in subsidiaries' income (loss)   (26 )       (66 )       40     60.6 %
Net income   $ 198,399     8.7 %   $ 127,478     5.0 %   $ 70,921     55.6 %
                         
Basic earnings per share   $ 2.94         $ 1.72         $ 1.22     70.9 %
Diluted earnings per share   $ 2.91         $ 1.70         $ 1.21     71.2 %
Weighted average shares (basic)   67,462         74,111              
Weighted average shares (diluted)   68,156         74,854              
                             


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Balance Sheet Highlights        
         
Selected Consolidated Balance Sheet Data   December 31, 2016   December 31, 2015
Cash and cash equivalents   $ 379,179     $ 304,183  
Total current assets   1,043,713     935,995  
Property, plant and equipment, net   372,377     411,323  
Total assets   1,943,437     1,784,171  
Total current liabilities   388,107     370,122  
Short-term debt (1)   1,889     4,278  
Long-term debt, less current portion   703,704     350,347  
Total equity   712,206     932,448  
         
Operating Working Capital   December 31, 2016   December 31, 2015
Accounts receivable   $ 273,993     $ 264,715  
Inventories   255,406     275,930  
Trade accounts payable   176,757     152,620  
Operating working capital   $ 352,642     $ 388,025  
         
Average operating working capital to net sales (2)   15.6 %   17.1 %
         
Invested Capital   December 31, 2016   December 31, 2015
Short-term debt (1)   $ 1,889     $ 4,278  
Long-term debt, less current portion   703,704     350,347  
Total debt   705,593     354,625  
Total equity   712,206     932,448  
Invested capital   $ 1,417,799     $ 1,287,073  
         
Total debt / invested capital   49.8 %   27.6 %

(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,
    2016   2015   2016   2015
Operating income as reported   $ 83,071     $ 78,435     $ 288,274     $ 181,700  
Special items (pre-tax):                
Rationalization and asset impairment charges (1)       434         19,958  
Loss on deconsolidation of Venezuelan subsidiary (2)           34,348      
Venezuela foreign exchange losses (3)       708         27,214  
Pension settlement charges (4)       6,407         142,738  
Adjusted operating income (6)   $ 83,071     $ 85,984     $ 322,622     $ 371,610  
As a percent of total sales   14.7 %   15.1 %   14.2 %   14.7 %
                 
Net income as reported   $ 53,395     $ 48,692     $ 198,399     $ 127,478  
Special items (after-tax):                
Rationalization and asset impairment charges (1)       450         18,182  
Loss on deconsolidation of Venezuelan subsidiary (2)           33,251      
Venezuela foreign exchange losses (3)       708         27,214  
Pension settlement charges (4)       3,969         87,310  
Income tax valuation reversals (5)           (7,196 )    
Adjusted net income (6)   $ 53,395     $ 53,819     $ 224,454     $ 260,184  
                 
Diluted earnings per share as reported   $ 0.81     $ 0.68     $ 2.91     $ 1.70  
Special items       0.07     0.38     1.78  
Adjusted diluted earnings per share (6)   $ 0.81     $ 0.75     $ 3.29     $ 3.48  
                 
Weighted average shares (diluted)   66,303     72,121     68,156     74,854  
                 

(1) The three and twelve months ended December 31, 2015 include net charges primarily related to severance and other related costs. The twelve months ended also includes charges related to the impairment of long-lived assets and goodwill.

(2) The twelve months ended December 31, 2016 reflect a charge (non-cash charge of $34.1 million pretax and $33.0 million after-tax) related to the deconsolidation of the Company's Venezuelan subsidiary.

(3) The three and twelve months ended December 31, 2015 represent the impact of Venezuelan remeasurement losses related to the adoption of new foreign exchange mechanisms.

(4) The three and twelve months ended December 31, 2015 include pension settlement charges primarily related to the purchase of a group annuity contract.

(5) The twelve months ended December 31, 2016 reflect reduced income tax expense related to the reversal of an income tax valuation allowance as a result of a legal entity change to realign the Company's tax structure.

(6) Adjusted operating income, 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 believe 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.

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   2016   2015
Net income as reported   $ 198,399     $ 127,478  
Rationalization and asset impairment charges, net of tax of $1,776       18,182  
Loss on deconsolidation of Venezuelan subsidiary, net of tax of $1,097   33,251      
Income tax valuation reversals   (7,196 )    
Pension settlement charges, net of tax of $55,428       87,310  
Venezuela foreign exchange losses       27,214  
Adjusted net income (1)   $ 224,454     $ 260,184  
Plus: Interest expense, net of tax of $7,304 and $8,355 in 2016 and 2015, respectively   11,775     13,469  
Less: Interest income, net of tax of $801 and $1,039 in 2016 and 2015, respectively   1,291     1,675  
Adjusted net income before tax effected interest   $ 234,938     $ 271,978  
         
Invested Capital   December 31, 2016   December 31, 2015
Short-term debt   $ 1,889     $ 4,278  
Long-term debt, less current portion   703,704     350,347  
Total debt   705,593     354,625  
Total equity   712,206     932,448  
Invested capital   $ 1,417,799     $ 1,287,073  
         
Return on invested capital (1)(2)   16.6 %   21.1 %
         

(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 believe 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 excluding tax-effected interest income and expense 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 December 31,
    2016   2015
OPERATING ACTIVITIES:        
Net income   $ 53,395     $ 48,692  
Non-controlling interests in subsidiaries' income   6     7  
Net income including non-controlling interests   53,401     48,699  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment charges       149  
Depreciation and amortization   16,578     16,110  
Equity earnings in affiliates, net   (197 )   (278 )
Pension expense, settlements and curtailments   1,516     10,967  
Pension contributions and payments   (325 )   (1,426 )
Other non-cash items, net   3,588     5,469  
Changes in operating assets and liabilities, net of effects from acquisitions:        
(Increase) decrease in accounts receivable   (358 )   42,080  
Decrease in inventories   22,274     28,243  
Increase (decrease) in trade accounts payable   15,705     (12,282 )
Net change in other current assets and liabilities   (47,332 )   (67,467 )
Net change in other long-term assets and liabilities   1,787     5,158  
NET CASH PROVIDED BY OPERATING ACTIVITIES   66,637     75,422  
         
INVESTING ACTIVITIES:        
Capital expenditures   (10,500 )   (10,320 )
Acquisition of businesses, net of cash acquired       (3,194 )
Proceeds from sale of property, plant and equipment   191     137  
Purchase of marketable securities   (38,920 )    
Other investing activities   (426 )    
NET CASH USED BY INVESTING ACTIVITIES   (49,655 )   (13,377 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   168,060     2,186  
Proceeds from exercise of stock options   14,631     1,396  
Excess tax benefits from stock-based compensation   5,740     487  
Purchase of shares for treasury   (53,409 )   (101,690 )
Cash dividends paid to shareholders   (21,150 )   (21,026 )
Other financing activities   (799 )   18  
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES   113,073     (118,629 )
         
Effect of exchange rate changes on Cash and cash equivalents   (7,804 )   (3,578 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   122,251     (60,162 )
Cash and cash equivalents at beginning of period   256,928     364,345  
Cash and cash equivalents at end of period   $ 379,179     $ 304,183  
         
Cash dividends paid per share   $ 0.32     $ 0.29  
                 

 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
     
    Twelve months ended December 31,
    2016   2015
OPERATING ACTIVITIES:        
Net income   $ 198,399     $ 127,478  
Non-controlling interests in subsidiaries' loss   (26 )   (66 )
Net income including non-controlling interests   198,373     127,412  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment charges       6,269  
Loss on deconsolidation of Venezuelan subsidiary   34,348      
Depreciation and amortization   65,073     64,007  
Equity earnings in affiliates, net   (261 )   (530 )
Pension expense, settlements and curtailments   13,988     162,815  
Pension contributions and payments   (22,484 )   (53,547 )
Other non-cash items, net   (3,549 )   (46,838 )
Changes in operating assets and liabilities, net of effects from acquisitions:        
(Increase) decrease in accounts receivable   (12,314 )   56,741  
Decrease in inventories   14,601     56,067  
Increase (decrease) in trade accounts payable   29,627     (46,911 )
Net change in other current assets and liabilities   (16,908 )   (20,435 )
Net change in other long-term assets and liabilities   2,909     5,808  
NET CASH PROVIDED BY OPERATING ACTIVITIES   303,403     310,858  
         
INVESTING ACTIVITIES:        
Capital expenditures   (49,877 )   (50,507 )
Acquisition of businesses, net of cash acquired   (71,567 )   (37,076 )
Proceeds from sale of property, plant and equipment   1,127     2,310  
Purchase of marketable securities   (38,920 )    
Other investing activities   (709 )   (79 )
NET CASH USED BY INVESTING ACTIVITIES   (159,946 )   (85,352 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   351,319     316,606  
Proceeds from exercise of stock options   25,049     5,996  
Excess tax benefits from stock-based compensation   9,154     1,974  
Purchase of shares for treasury   (342,003 )   (399,494 )
Cash dividends paid to shareholders   (87,330 )   (86,968 )
Other financing activities   (19,043 )   (8,022 )
NET CASH USED BY FINANCING ACTIVITIES   (62,854 )   (169,908 )
         
Effect of exchange rate changes on Cash and cash equivalents   (5,607 )   (29,794 )
INCREASE IN CASH AND CASH EQUIVALENTS   74,996     25,804  
Cash and cash equivalents at beginning of period   304,183     278,379  
Cash and cash equivalents at end of period   $ 379,179     $ 304,183  
         
Cash dividends paid per share   $ 1.28     $ 1.16  
                 


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, 2016                
Net sales   $ 370,082     $ 130,605     $ 63,141     $     $ 563,828  
Inter-segment sales   23,939     4,020     1,726     (29,685 )    
Total   $ 394,021     $ 134,625     $ 64,867     $ (29,685 )   $ 563,828  
                     
EBIT (2)   $ 71,709     $ 7,447     $ 6,628     $ (1,248 )   $ 84,536  
As a percent of total sales   18.2 %   5.5 %   10.2 %       15.0 %
Special items charge (3)                    
Adjusted EBIT (4)   $ 71,709     $ 7,447     $ 6,628     $ (1,248 )   $ 84,536  
As a percent of total sales   18.2 %   5.5 %   10.2 %       15.0 %
Three months ended December 31, 2015                
Net sales   $ 387,340     $ 121,214     $ 59,431     $     $ 567,985  
Inter-segment sales   20,042     3,009     2,278     (25,329 )    
Total   $ 407,382     $ 124,223     $ 61,709     $ (25,329 )   $ 567,985  
                     
EBIT (2)   $ 72,027     $ 2,804     $ 5,661     $ (221 )   $ 80,271  
As a percent of total sales   17.7 %   2.3 %   9.2 %       14.1 %
Special items charge (3)   7,061     488             7,549  
Adjusted EBIT (4)   $ 79,088     $ 3,292     $ 5,661     $ (221 )   $ 87,820  
As a percent of total sales   19.4 %   2.7 %   9.2 %       15.5 %
Twelve months ended December 31, 2016                
Net sales   $ 1,494,982     $ 507,289     $ 272,343     $     $ 2,274,614  
Inter-segment sales   93,612     15,975     8,709     (118,296 )    
Total   $ 1,588,594     $ 523,264     $ 281,052     $ (118,296 )   $ 2,274,614  
                     
EBIT (2)   $ 266,633     $ 29,146     $ 32,380     $ (33,784 )   $ 294,375  
As a percent of total sales   16.8 %   5.6 %   11.5 %       12.9 %
Special items charge (3)               34,348     34,348  
Adjusted EBIT (4)   $ 266,633     $ 29,146     $ 32,380     $ 564     $ 328,723  
As a percent of total sales   16.8 %   5.6 %   11.5 %       14.5 %
Twelve months ended December 31, 2015                
Net sales   $ 1,741,350     $ 530,460     $ 263,981     $     $ 2,535,791  
Inter-segment sales   92,538     18,747     9,312     (120,597 )    
Total   $ 1,833,888     $ 549,207     $ 273,293     $ (120,597 )   $ 2,535,791  
                     
EBIT (2)   $ 143,450     $ 17,840     $ 27,882     $ (275 )   $ 188,897  
As a percent of total sales   7.8 %   3.2 %   10.2 %       7.4 %
Special items charge (3)   173,239     16,671             189,910  
Adjusted EBIT (4)   $ 316,689     $ 34,511     $ 27,882     $ (275 )   $ 378,807  
As a percent of total sales   17.3 %   6.3 %   10.2 %       14.9 %
                             

(1) As previously announced on February 9, 2016, the Company realigned its organizational structure into three operating segments which was effective beginning in the first quarter of 2016.

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

(3) Special items within Corporate/Elimination reflect a charge ($34.1 million non-cash) related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016. Refer to 'Non-GAAP Financial Measures' for detail on excluded special items.

(4) 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.

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
2015
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2016
Operating Segments                        
Americas Welding   $ 387,340     $ (22,315 )   $ 7,232     $ (176 )   $ (1,999 )   $ 370,082  
International Welding   121,214     12,627         (185 )   (3,051 )   130,605  
The Harris Products Group   59,431     2,322         902     486     63,141  
Consolidated   $ 567,985     $ (7,366 )   $ 7,232     $ 541     $ (4,564 )   $ 563,828  
                         
Americas Welding (excluding Venezuela)   $ 383,597     $ (18,572 )   $ 7,232     $ (176 )   $ (1,999 )   $ 370,082  
Consolidated (excluding Venezuela)   $ 564,242     $ (3,623 )   $ 7,232     $ 541     $ (4,564 )   $ 563,828  
                         
% Change                        
Americas Welding       (5.8 %)   1.9 %       (0.5 %)   (4.5 %)
International Welding       10.4 %       (0.2 %)   (2.5 %)   7.7 %
The Harris Products Group       3.9 %       1.5 %   0.8 %   6.2 %
Consolidated       (1.3 %)   1.3 %   0.1 %   (0.8 %)   (0.7 %)
                         
Americas Welding (excluding Venezuela)           (4.8 %)   1.9 %       (0.5 %)   (3.5 %)
Consolidated (excluding Venezuela)           (0.6 %)   1.3 %   0.1 %   (0.8 %)   (0.1 %)
                         
Twelve Months Ended December 31st Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2015
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2016
Operating Segments                        
Americas Welding   $ 1,741,350     $ (248,715 )   $ 42,832     $ 268,205     $ (308,690 )   $ 1,494,982  
International Welding   530,460     (8,629 )   8,622     (8,428 )   (14,736 )   $ 507,289  
The Harris Products Group   263,981     9,683         (85 )   (1,236 )   $ 272,343  
Consolidated   $ 2,535,791     $ (247,661 )   $ 51,454     $ 259,692     $ (324,662 )   $ 2,274,614  
                         
Americas Welding (excluding Venezuela)   $ 1,656,687     $ (191,037 )   $ 42,832     $ (7,874 )   $ (16,440 )   $ 1,484,168  
Consolidated (excluding Venezuela)   $ 2,451,129     $ (189,983 )   $ 51,454     $ (16,386 )   $ (32,413 )   $ 2,263,801  
                         
% Change                        
Americas Welding       (14.3 %)   2.5 %   15.4 %   (17.7 %)   (14.1 %)
International Welding       (1.6 %)   1.6 %   (1.6 %)   (2.8 %)   (4.4 %)
The Harris Products Group       3.7 %           (0.5 %)   3.2 %
Consolidated       (9.8 %)   2.0 %   10.2 %   (12.8 %)   (10.3 %)
                         
Americas Welding (excluding Venezuela)           (11.5 %)   2.6 %   (0.5 %)   (1.0 %)   (10.4 %)
Consolidated (excluding Venezuela)           (7.8 %)   2.1 %   (0.7 %)   (1.3 %)   (7.6 %)
                         


Contact

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

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Lincoln Electric Holdings, Inc.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Lincoln Electric Holdings Inc's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.