News Release

Lincoln Electric Reports Second Quarter 2017 Results

Lincoln Electric Reports Second Quarter 2017 Results


 
Second Quarter 2017 Highlights
-  Organic sales increase 5.8%
-  Operating income margin of 14.0%, 14.7% on an adjusted basis
-  EPS of $0.92, Adjusted EPS of $0.97
 


CLEVELAND, July 25, 2017 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq:LECO) today reported second quarter 2017 net income of $61.4 million, or diluted earnings per share (EPS) of $0.92, which includes acquisition transaction and integration costs of $4.5 million, $3.5 million after-tax, or $0.05 EPS, related to the proposed acquisition of Air Liquide Welding.  The second quarter 2017 also includes a $2.9 million, or $0.04 EPS, tax benefit from stock option exercises that are now recognized through income tax expense following the adoption of a new accounting standard in the first quarter 2017.  Second quarter 2016 net income was $31.3 million, or $0.45 EPS, and on an adjusted basis, $57.4 million, or $0.83 EPS.

Second quarter 2017 sales increased 5.8% to $626.9 million on 3.2% higher volumes and a 2.6% increase in price.  Excluding Venezuela from prior year results due to the deconsolidation of the operation, sales increased 6.9%, from 4.2% higher volumes and a 2.7% increase in price.

Operating income for second quarter 2017 was $87.6 million, or 14.0% of sales.  This compares with operating income of $48.1 million, or 8.1% of sales, in the comparable 2016 period.  On an adjusted basis, operating income was $92.1 million, or 14.7% of sales, as compared with $82.4 million, or 13.9% of sales, in the prior year.

On April 27, 2017, the Company entered into a definitive agreement with Air Liquide to acquire its Air Liquide Welding subsidiary.  The definitive agreement reflects an approximate $131 million purchase price for the Air Liquide Welding business, including the assumption of net debt and working capital adjustments.  The proposed acquisition is expected to close on July 31, 2017.

"We achieved good momentum in the second quarter with sales growth across all three segments and among most end markets," stated Christopher L. Mapes, chairman, president and chief executive officer.  "Financial performance remained solid as operational initiatives and volume improvements helped mitigate rising raw material costs and operating expenses.  Given sustained improvement in year-over-year demand, we expect to continue to achieve modest sales and margin growth in 2017.  We are also looking forward to completing the Air Liquide Welding acquisition, which will further advance our '2020 Vision and Strategy'."

Six Months 2017 Summary

Net income for the six months ended June 30, 2017 was $117.2 million, or EPS of $1.76, which includes acquisition transaction and integration costs of $8.1 million, $6.2 million after-tax, or $0.09 EPS, related to the proposed acquisition of Air Liquide Welding.  The six months ended June 30, 2017 also includes a $4.1 million, or $0.06 EPS, tax benefit from stock option exercises that are now recognized through income tax expense following the adoption of a new accounting standard in the first quarter 2017.  For the six months ended June 30, 2016, net income was $85.0 million, or $1.22 EPS, and on an adjusted basis, $111.0 million, or $1.60 EPS.

Sales increased 5.7% to $1.2 billion for the six months ended June 30, 2017 on 3.1% higher volumes and a 2.4% increase in price.  Excluding Venezuela from prior year results due to the deconsolidation of the operation, sales increased 6.7%, from 4.1% higher volumes and a 2.4% increase in price.

Operating income for six months ended June 30, 2017 was $169.1 million, or 14.0% of sales.  This compares with operating income of $123.4 million, or 10.8% of sales, in the comparable 2016 period.  On an adjusted basis, operating income was $177.2 million, or 14.7% of sales, as compared with $157.7 million, or 13.8% of sales, in the prior year.

Webcast Information

A conference call to discuss second quarter 2017 financial results will be webcast live today, July 25, 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 51410082.  Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the second quarter 2017 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 http://www.lincolnelectric.com.

Non-GAAP 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, including the Company's ability to successfully complete the Air Liquide Welding business acquisition; 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, 2016.


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
    2017   % of Sales   2016   % of Sales   $   %
Net sales   $ 626,858     100.0 %   $ 592,418     100.0 %   $ 34,440     5.8 %
Cost of goods sold   409,370     65.3 %   389,491     65.7 %   (19,879 )   (5.1 %)
Gross profit   217,488     34.7 %   202,927     34.3 %   14,561     7.2 %
Selling, general & administrative expenses   129,846     20.7 %   120,497     20.3 %   (9,349 )   (7.8 %)
Loss on deconsolidation of Venezuelan subsidiary           34,348     5.8 %   34,348     100.0 %
Operating income   87,642     14.0 %   48,082     8.1 %   39,560     82.3 %
Interest income   1,245     0.2 %   435     0.1 %   810     186.2 %
Equity earnings in affiliates   440     0.1 %   839     0.1 %   (399 )   (47.6 %)
Other income   936     0.1 %   588     0.1 %   348     59.2 %
Interest expense   (6,297 )   1.0 %   (4,186 )   0.7 %   (2,111 )   (50.4 %)
Income before income taxes   83,966     13.4 %   45,758     7.7 %   38,208     83.5 %
Income taxes   22,635     3.6 %   14,449     2.4 %   (8,186 )   (56.7 %)
Effective tax rate   27.0 %       31.6 %       4.6 %    
Net income including non-controlling interests   61,331     9.8 %   31,309     5.3 %   30,022     95.9 %
Non-controlling interests in subsidiaries' loss   (21 )       (8 )       (13 )   (162.5 %)
Net income   $ 61,352     9.8 %   $ 31,317     5.3 %   $ 30,035     95.9 %
                         
Basic earnings per share   $ 0.93         $ 0.46         $ 0.47     102.2 %
Diluted earnings per share   $ 0.92         $ 0.45         $ 0.47     104.4 %
Weighted average shares (basic)   65,811         68,181              
Weighted average shares (diluted)   66,743         68,890              
    Six Months Ended June 30,   Fav (Unfav) to
Prior Year
    2017   % of Sales   2016   % of Sales   $   %
Net sales   $ 1,207,755     100.0 %   $ 1,143,140     100.0 %   $ 64,615     5.7 %
Cost of goods sold   786,411     65.1 %   751,111     65.7 %   (35,300 )   (4.7 %)
Gross profit   421,344     34.9 %   392,029     34.3 %   29,315     7.5 %
Selling, general & administrative expenses   252,216     20.9 %   234,307     20.5 %   (17,909 )   (7.6 %)
Loss on deconsolidation of Venezuelan subsidiary           34,348     3.0 %   34,348     100.0 %
Operating income   169,128     14.0 %   123,374     10.8 %   45,754     37.1 %
Interest income   2,022     0.2 %   865     0.1 %   1,157     133.8 %
Equity earnings in affiliates   1,235     0.1 %   1,465     0.1 %   (230 )   (15.7 %)
Other income   1,892     0.2 %   1,249     0.1 %   643     51.5 %
Interest expense   (12,411 )   1.0 %   (8,013 )   0.7 %   (4,398 )   (54.9 %)
Income before income taxes   161,866     13.4 %   118,940     10.4 %   42,926     36.1 %
Income taxes   44,687     3.7 %   34,007     3.0 %   (10,680 )   (31.4 %)
Effective tax rate   27.6 %       28.6 %       1.0 %    
Net income including non-controlling interests   117,179     9.7 %   84,933     7.4 %   32,246     38.0 %
Non-controlling interests in subsidiaries' loss   (17 )       (22 )       5     22.7 %
Net income   $ 117,196     9.7 %   $ 84,955     7.4 %   $ 32,241     38.0 %
                         
Basic earnings per share   $ 1.78         $ 1.23         $ 0.55     44.7 %
Diluted earnings per share   $ 1.76         $ 1.22         $ 0.54     44.3 %
Weighted average shares (basic)   65,750         68,883              
Weighted average shares (diluted)   66,666         69,569              


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
 
Balance Sheet Highlights        
         
Selected Consolidated Balance Sheet Data   June 30, 2017   December 31, 2016
Cash and cash equivalents   $ 395,735     $ 379,179  
Total current assets   1,207,832     1,043,713  
Property, plant and equipment, net   384,947     372,377  
Total assets   2,121,673     1,943,437  
Total current liabilities   415,643     388,107  
Short-term debt (1)   1,953     1,889  
Long-term debt, less current portion   704,732     703,704  
Total equity   851,776     712,206  
         
Operating Working Capital   June 30, 2017   December 31, 2016
Accounts receivable, net   $ 323,185     $ 273,993  
Inventories   289,635     255,406  
Trade accounts payable   194,758     176,757  
Operating working capital   $ 418,062     $ 352,642  
         
Average operating working capital to Net sales (2)   16.7 %   15.6 %
         
Invested Capital   June 30, 2017   December 31, 2016
Short-term debt (1)   $ 1,953     $ 1,889  
Long-term debt, less current portion   704,732     703,704  
Total debt   706,685     705,593  
Total equity   851,776     712,206  
Invested capital   $ 1,558,461     $ 1,417,799  
         
Total debt / invested capital   45.3 %   49.8 %

(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 June 30,   Six Months Ended June 30,
    2017   2016   2017   2016
Operating income as reported   $ 87,642     $ 48,082     $ 169,128     $ 123,374  
Special items (pre-tax):                
Loss on deconsolidation of Venezuelan subsidiary (2)       34,348         34,348  
Acquisition transaction and integration costs (3)   4,498         8,113      
Adjusted operating income (1)   $ 92,140     $ 82,430     $ 177,241     $ 157,722  
As a percent of total sales   14.7 %   13.9 %   14.7 %   13.8 %
                 
Net income as reported   $ 61,352     $ 31,317     $ 117,196     $ 84,955  
Special items (after-tax):                
Loss on deconsolidation of Venezuelan subsidiary (2)       33,251         33,251  
Income tax valuation reversals (4)       (7,196 )       (7,196 )
Acquisition transaction and integration costs (3)   3,494         6,228      
Adjusted net income (1)   $ 64,846     $ 57,372     $ 123,424     $ 111,010  
                 
Diluted earnings per share as reported   $ 0.92     $ 0.45     $ 1.76     $ 1.22  
Special items   0.05     0.38     0.09     0.38  
Adjusted diluted earnings per share (1)   $ 0.97     $ 0.83     $ 1.85     $ 1.60  
                 
Weighted average shares (diluted)   66,743     68,890     66,666     69,569  

(1)  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 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)  Related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016.

(3)  Related to proposed acquisition of Air Liquide Welding.

(4)  Related to the reversal of an income tax valuation allowance as a result of a legal entity change.


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   2017   2016
Net income as reported   $ 230,640     $ 73,181  
Rationalization and asset impairment charges, net of tax of $1,437       17,281  
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 currency devaluation       27,214  
Acquisition transaction and integration costs, net of tax of $1,885 (3)   6,228      
Adjusted net income (1)   $ 236,868     $ 231,041  
Plus: Interest expense, net of tax of $8,988 and $9,038 in 2017 and 2016, respectively   14,489     14,568  
Less: Interest income, net of tax of $1,244 and $861 in 2017 and 2016, respectively   2,005     1,387  
Adjusted net income before tax effected interest   $ 249,352     $ 244,222  
         
Invested Capital   June 30, 2017   June 30, 2016
Short-term debt   $ 1,953     $ 159,908  
Long-term debt, less current portion   704,732     360,931  
Total debt   706,685     520,839  
Total equity   851,776     792,414  
Invested capital   $ 1,558,461     $ 1,313,253  
         
Return on invested capital (1)(2)   16.0 %   18.6 %

(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 excluding tax-effected interest income and expense divided by invested capital.

(3)  Related to proposed acquisition of Air Liquide Welding.


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows    
     
    Three Months Ended June 30,
    2017   2016
OPERATING ACTIVITIES:        
Net income   $ 61,352     $ 31,317  
Non-controlling interests in subsidiaries' loss   (21 )   (8 )
Net income including non-controlling interests   61,331     31,309  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Loss on deconsolidation of Venezuelan subsidiary       34,348  
Depreciation and amortization   15,840     16,607  
Equity loss (earnings) in affiliates, net   195     (56 )
Pension (income) expense   (1,334 )   5,112  
Pension contributions and payments   (618 )   (712 )
Other non-cash items, net   9,091     (3,316 )
Changes in operating assets and liabilities, net of effects from acquisitions:        
Increase in accounts receivable   (15,811 )   (5,801 )
Increase in inventories   (3,811 )   (4,712 )
Increase in trade accounts payable   5,455     17,571  
Net change in other current assets and liabilities   3,536     12,083  
Net change in other long-term assets and liabilities   1,573     (272 )
NET CASH PROVIDED BY OPERATING ACTIVITIES   75,447     102,161  
         
INVESTING ACTIVITIES:        
Capital expenditures   (16,094 )   (15,894 )
Acquisition of businesses, net of cash acquired       (71,567 )
Proceeds from sale of property, plant and equipment   899     221  
Purchase of marketable securities   (35,009 )    
Proceeds from marketable securities   1,190      
Other investing activities       (283 )
NET CASH USED BY INVESTING ACTIVITIES   (49,014 )   (87,523 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   (321 )   137,514  
Proceeds from exercise of stock options   7,754     3,700  
Purchase of shares for treasury   (7,345 )   (100,445 )
Cash dividends paid to shareholders   (23,030 )   (22,022 )
Other financing activities   (15,182 )   (14,438 )
NET CASH (USED BY) PROVIDED BY FINANCING ACTIVITIES   (38,124 )   4,309  
         
Effect of exchange rate changes on Cash and cash equivalents   5,986     (2,924 )
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (5,705 )   16,023  
Cash and cash equivalents at beginning of period   401,440     220,996  
Cash and cash equivalents at end of period   $ 395,735     $ 237,019  
         
Cash dividends paid per share   $ 0.35     $ 0.32  


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows    
     
    Six Months Ended June 30,
    2017   2016
OPERATING ACTIVITIES:        
Net income   $ 117,196     $ 84,955  
Non-controlling interests in subsidiaries' loss   (17 )   (22 )
Net income including non-controlling interests   117,179     84,933  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Loss on deconsolidation of Venezuelan subsidiary       34,348  
Depreciation and amortization   32,006     32,232  
Equity earnings in affiliates, net   (75 )   (58 )
Pension (income) expense   (2,679 )   9,256  
Pension contributions and payments   (1,168 )   (21,577 )
Other non-cash items, net   15,632     (5,395 )
Changes in operating assets and liabilities, net of effects from acquisitions:        
Increase in accounts receivable   (40,006 )   (22,393 )
Increase in inventories   (24,757 )   (15,492 )
Increase in trade accounts payable   12,619     22,228  
Net change in other current assets and liabilities   38,869     9,529  
Net change in other long-term assets and liabilities   4,067     (732 )
NET CASH PROVIDED BY OPERATING ACTIVITIES   151,687     126,879  
         
INVESTING ACTIVITIES:        
Capital expenditures   (28,131 )   (24,779 )
Acquisition of businesses, net of cash acquired       (71,567 )
Proceeds from sale of property, plant and equipment   1,102     679  
Purchase of marketable securities   (69,934 )    
Proceeds from marketable securities   4,990      
Other investing activities       (283 )
NET CASH USED BY INVESTING ACTIVITIES   (91,973 )   (95,950 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   (211 )   159,270  
Proceeds from exercise of stock options   13,397     5,715  
Purchase of shares for treasury   (7,748 )   (202,933 )
Cash dividends paid to shareholders   (46,016 )   (44,647 )
Other financing activities   (15,189 )   (18,244 )
NET CASH USED BY FINANCING ACTIVITIES   (55,767 )   (100,839 )
         
Effect of exchange rate changes on Cash and cash equivalents   12,609     2,746  
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   16,556     (67,164 )
Cash and cash equivalents at beginning of period   379,179     304,183  
Cash and cash equivalents at end of period   $ 395,735     $ 237,019  
         
Cash dividends paid per share   $ 0.70     $ 0.64  


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, 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  
                     
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 charge (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 %
Three months ended June 30, 2016                        
Net sales   $ 388,372     $ 132,815     $ 71,231     $     $ 592,418  
Inter-segment sales   23,456     3,841     2,824     (30,121 )    
Total   $ 411,828     $ 136,656     $ 74,055     $ (30,121 )   $ 592,418  
                     
EBIT (1)   $ 65,201     $ 9,670     $ 9,284     $ (34,646 )   $ 49,509  
As a percent of total sales   15.8 %   7.1 %   12.5 %       8.4 %
Special items charge (4)               34,348     34,348  
Adjusted EBIT (2)   $ 65,201     $ 9,670     $ 9,284     $ (298 )   $ 83,857  
As a percent of total sales   15.8 %   7.1 %   12.5 %       14.2 %
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  
                     
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 charge (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 %
Six months ended June 30, 2016                        
Net sales   $ 747,380     $ 257,120     $ 138,640     $     $ 1,143,140  
Inter-segment sales   47,287     8,267     5,127     (60,681 )    
Total   $ 794,667     $ 265,387     $ 143,767     $ (60,681 )   $ 1,143,140  
                     
EBIT (1)   $ 126,639     $ 15,903     $ 16,995     $ (33,449 )   $ 126,088  
As a percent of total sales   15.9 %   6.0 %   11.8 %       11.0 %
Special items charge (4)               34,348     34,348  
Adjusted EBIT (2)   $ 126,639     $ 15,903     $ 16,995     $ 899     $ 160,436  
As a percent of total sales   15.9 %   6.0 %   11.8 %       14.0 %

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

(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 reflect acquisition transaction and integration costs related to proposed acquisition of Air Liquide Welding.

(4)  Special items reflect a charge related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016.


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
2016
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2017
Operating Segments                        
Americas Welding   $ 388,372     $ 6,766     $ 1,354     $ 10,508     $ (1,853 )   $ 405,147  
International Welding   132,815     4,377         4,423     (117 )   141,498  
The Harris Products Group   71,231     7,916         692     374     80,213  
Consolidated   $ 592,418     $ 19,059     $ 1,354     $ 15,623     $ (1,596 )   $ 626,858  
                         
Americas Welding (excluding Venezuela)   $ 382,539     $ 12,599     $ 1,354     $ 10,508     $ (1,853 )   $ 405,147  
Consolidated (excluding Venezuela)   $ 586,585     $ 24,892     $ 1,354     $ 15,623     $ (1,596 )   $ 626,858  
                         
% Change                        
Americas Welding       1.7 %   0.3 %   2.7 %   (0.5 %)   4.3 %
International Welding       3.3 %       3.3 %   (0.1 %)   6.5 %
The Harris Products Group       11.1 %       1.0 %   0.5 %   12.6 %
Consolidated       3.2 %   0.2 %   2.6 %   (0.3 %)   5.8 %
                         
Americas Welding (excluding Venezuela)   3.3 %   0.4 %   2.7 %   (0.5 %)   5.9 %
Consolidated (excluding Venezuela) (1)   4.2 %   0.2 %   2.7 %   (0.3 %)   6.9 %
                         
Six Months Ended June 30th Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2016
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2017
Operating Segments                        
Americas Welding   $ 747,380     $ 21,527     $ 4,692     $ 16,028     $ (1,156 )   $ 788,471  
International Welding   257,120     7,724         7,622     (2,080 )   $ 270,386  
The Harris Products Group   138,640     5,932         3,410     916     $ 148,898  
Consolidated   $ 1,143,140     $ 35,183     $ 4,692     $ 27,060     $ (2,320 )   $ 1,207,755  
                         
Americas Welding (excluding Venezuela)   $ 736,566     $ 32,341     $ 4,692     $ 16,028     $ (1,156 )   $ 788,471  
Consolidated (excluding Venezuela)   $ 1,132,327     $ 45,996     $ 4,692     $ 27,060     $ (2,320 )   $ 1,207,755  
                         
% Change                        
Americas Welding       2.9 %   0.6 %   2.1 %   (0.2 %)   5.5 %
International Welding       3.0 %       3.0 %   (0.8 %)   5.2 %
The Harris Products Group       4.3 %       2.5 %   0.7 %   7.4 %
Consolidated       3.1 %   0.4 %   2.4 %   (0.2 %)   5.7 %
                         
Americas Welding (excluding Venezuela)           4.4 %   0.6 %   2.2 %   (0.2 %)   7.0 %
Consolidated (excluding Venezuela) (1)           4.1 %   0.4 %   2.4 %   (0.2 %)   6.7 %

(1)  Venezuelan sales in the three and six months ended June 30, 2016 were $6 million and $11 million, respectively.


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.