News Release

Lincoln Electric Reports Third Quarter 2017 Results

Lincoln Electric Reports Third Quarter 2017 Results


Third Quarter 2017 Highlights
 
  • Sales increase of 17.9% with 5.6% higher organic sales as industrial demand improves
  • EPS of $1.59, Adjusted EPS of $0.93
  • Solid cash conversion of 134%1
 

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

CLEVELAND, Oct. 27, 2017 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq:LECO) today reported third quarter 2017 net income of $106.1 million, or diluted earnings per share (EPS) of $1.59.  Reported EPS includes a bargain purchase gain related to the Air Liquide Welding acquisition ($51.6 million, or $0.77 EPS) and other special item after-tax charges ($7.2 million, or $0.11 EPS).  Excluding these items, third quarter adjusted net income was $61.8 million, or $0.93 EPS, as compared with $60.0 million, or $0.89 EPS in the prior year period.

Third quarter 2017 sales increased 17.9% to $669.5 million from an 11.0% benefit from acquisitions, 3.8% higher volumes, a 1.8% increase in price and 1.4% from favorable foreign exchange.

Operating income for the third quarter 2017 was $133.1 million, or 19.9% of sales.  This compares with operating income of $81.8 million, or 14.4% of sales, in the comparable 2016 period.  On an adjusted basis, operating income was $92.4 million, or 13.8% of sales, as compared with $81.8 million, or 14.4% of sales, in the prior year.  The acquisition had an unfavorable 140 basis point impact to the adjusted operating income margin.

The third quarter 2017 tax rate was 18.8%.  The tax rate was favorably impacted by the bargain purchase gain, which had no tax effect.  The third quarter 2017 tax rate excluding special items was 31.3% as compared to 25.2% in the comparable 2016 period.  The higher current year effective tax rate is attributable to the geographical mix of earnings and the unfavorable effect of discrete tax items.

On July 31, 2017, the Company completed its acquisition of Air Liquide Welding, a subsidiary of Air Liquide, for a purchase price of $135.1 million adjusted for certain debt-like obligations.  The cash purchase price paid, net of cash acquired, was $72.5 million.  The Company funded the transaction with available cash on hand.

Christopher L. Mapes, chairman, president and chief executive officer stated:

"We achieved solid performance from improving end market demand and the successful close of the Air Liquide Welding transaction.  Integration is proceeding quickly and we remain confident in the synergies we expect to realize from our initiatives.  As we move into 2018, we expect to benefit from an ongoing global recovery in most end markets.  Our team will continue to focus on the global integration of the Air Liquide Welding business, relentlessly support our customers and execute on our 2020 Vision and Strategy."

Nine Months 2017 Summary

Net income for the nine months ended September 30, 2017 was $223.3 million, or EPS of $3.35, as compared with $145.0 million, or $2.11 EPS in the prior year period.  Current period reported EPS includes a bargain purchase gain related to the Air Liquide Welding acquisition ($51.6 million, or $0.77 EPS) and other special item after-tax charges ($13.5 million, or $0.20 EPS).  Adjusted net income for the nine months ended September 30, 2017 was $185.2 million, or $2.78 EPS, as compared with $171.1 million, or $2.49 EPS in the prior period.

Sales increased 9.7% to $1.9 billion for the nine months ended September 30, 2017 from a 3.9% benefit from acquisitions, 3.3% higher volumes and a 2.2% increase in price.

Operating income for the nine months ended September 30, 2017 was $302.2 million, or 16.1% of sales.  This compares with operating income of $205.2 million, or 12.0% of sales, in the comparable 2016 period.  On an adjusted basis, operating income was $269.6 million, or 14.4% of sales, as compared with $239.6 million, or 14.0% of sales, in the prior year.  The acquisition had an unfavorable 50 basis point impact to the adjusted operating income margin.

The tax rate was 23.7% for the nine months ended September 30, 2017.  The tax rate was favorably impacted by the bargain purchase gain, which had no tax effect.  The current period tax rate excluding special items was 28.8% as compared to 26.8% in the comparable 2016 period.  The higher current year effective tax rate is attributable to the geographical mix of earnings and the unfavorable effect of discrete tax items.

Dividend

The Company's Board of Directors declared an 11.4% increase in the quarterly cash dividend, from $0.35 per share to $0.39, or $1.56 per share on an annual basis.  The declared quarterly cash dividend of $0.39 per share is payable January 12, 2018 to shareholders of record as of December 29, 2017.

Webcast Information

A conference call to discuss third quarter 2017 financial results will be webcast live today, October 27, 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 94532360.  Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the third 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 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 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; 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.

Contact

Amanda Butler
Vice President, Investor Relations & Communications
Tel: 216.383.2534
Email: Amanda_Butler@lincolnelectric.com

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Consolidated Statements of Income   Three Months Ended September 30,   Fav (Unfav) to
Prior Year
    2017   % of Sales   2016   % of Sales   $   %
Net sales   $ 669,491     100.0 %   $ 567,646     100.0 %   $ 101,845     17.9 %
Cost of goods sold   449,975     67.2 %   367,834     64.8 %   (82,141 )   (22.3 %)
Gross profit   219,516     32.8 %   199,812     35.2 %   19,704     9.9 %
Selling, general & administrative expenses   132,748     19.8 %   117,983     20.8 %   (14,765 )   (12.5 %)
Pension settlement charges   5,283     0.8 %           (5,283 )   (100.0 %)
Bargain purchase gain   (51,585 )   7.7 %           51,585     100.0 %
Operating income   133,070     19.9 %   81,829     14.4 %   51,241     62.6 %
Interest income   1,327     0.2 %   360     0.1 %   967     268.6 %
Equity earnings in affiliates   766     0.1 %   619     0.1 %   147     23.7 %
Other income   1,401     0.2 %   1,303     0.2 %   98     7.5 %
Interest expense   (5,922 )   0.9 %   (3,815 )   0.7 %   (2,107 )   (55.2 %)
Income before income taxes   130,642     19.5 %   80,296     14.1 %   50,346     62.7 %
Income taxes   24,531     3.7 %   20,257     3.6 %   (4,274 )   (21.1 %)
Effective tax rate   18.8 %       25.2 %       6.4 %    
Net income including non-controlling interests   106,111     15.8 %   60,039     10.6 %   46,072     76.7 %
Non-controlling interests in subsidiaries' loss   (15 )       (10 )       (5 )   (50.0 %)
Net income   $ 106,126     15.9 %   $ 60,049     10.6 %   $ 46,077     76.7 %
                         
Basic earnings per share   $ 1.61         $ 0.90         $ 0.71     78.9 %
Diluted earnings per share   $ 1.59         $ 0.89         $ 0.70     78.7 %
Weighted average shares (basic)   65,806         66,477              
Weighted average shares (diluted)   66,702         67,182              
    Nine Months Ended September 30,   Fav (Unfav) to
Prior Year
    2017   % of Sales   2016   % of Sales   $   %
Net sales   $ 1,877,246     100.0 %   $ 1,710,786     100.0 %   $ 166,460     9.7 %
Cost of goods sold   1,236,386     65.9 %   1,118,945     65.4 %   (117,441 )   (10.5 %)
Gross profit   640,860     34.1 %   591,841     34.6 %   49,019     8.3 %
Selling, general & administrative expenses   384,964     20.5 %   352,290     20.6 %   (32,674 )   (9.3 %)
Pension settlement charges   5,283     0.3 %           (5,283 )   (100.0 %)
Loss on deconsolidation of Venezuelan subsidiary           34,348     2.0 %   34,348     100.0 %
Bargain purchase gain   (51,585 )   2.7 %           51,585     100.0 %
Operating income   302,198     16.1 %   205,203     12.0 %   96,995     47.3 %
Interest income   3,349     0.2 %   1,225     0.1 %   2,124     173.4 %
Equity earnings in affiliates   2,001     0.1 %   2,084     0.1 %   (83 )   (4.0 %)
Other income   3,293     0.2 %   2,552     0.1 %   741     29.0 %
Interest expense   (18,333 )   1.0 %   (11,828 )   0.7 %   (6,505 )   (55.0 %)
Income before income taxes   292,508     15.6 %   199,236     11.6 %   93,272     46.8 %
Income taxes   69,218     3.7 %   54,264     3.2 %   (14,954 )   (27.6 %)
Effective tax rate   23.7 %       27.2 %       3.5 %    
Net income including non-controlling interests   223,290     11.9 %   144,972     8.5 %   78,318     54.0 %
Non-controlling interests in subsidiaries' loss   (32 )       (32 )            
Net income   $ 223,322     11.9 %   $ 145,004     8.5 %   $ 78,318     54.0 %
                         
Basic earnings per share   $ 3.40         $ 2.13         $ 1.27     59.6 %
Diluted earnings per share   $ 3.35         $ 2.11         $ 1.24     58.8 %
Weighted average shares (basic)   65,769         68,081              
Weighted average shares (diluted)   66,679         68,784              


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
 
Balance Sheet Highlights
 
Selected Consolidated Balance Sheet Data   September 30, 2017   December 31, 2016
Cash and cash equivalents   $ 299,453     $ 379,179  
Marketable securities   179,284     38,922  
Total current assets   1,378,681     1,043,713  
Property, plant and equipment, net   475,071     372,377  
Total assets   2,411,103     1,943,437  
Total current liabilities   539,856     388,107  
Short-term debt (1)   2,135     1,889  
Long-term debt, less current portion   704,804     703,704  
Total equity   945,928     712,206  
         
Operating Working Capital   September 30, 2017   December 31, 2016
Accounts receivable, net   $ 401,231     $ 273,993  
Inventories   389,722     255,406  
Trade accounts payable   242,253     176,757  
Operating working capital   $ 548,700     $ 352,642  
         
Average operating working capital to Net sales (2)   20.5 % (3 ) 15.6 %
         
Invested Capital   September 30, 2017   December 31, 2016
Short-term debt (1)   $ 2,135     $ 1,889  
Long-term debt, less current portion   704,804     703,704  
Total debt   706,939     705,593  
Total equity   945,928     712,206  
Invested capital   $ 1,652,867     $ 1,417,799  
         
Total debt / invested capital   42.8 %   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.
(3) Includes only two months of Net sales related to the acquisition of Air Liquide Welding.  Average operating working capital to Net Sales excluding the acquisition was 17.6%.


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Non-GAAP Financial Measures
 
    Three Months Ended September 30,   Nine Months Ended September 30,
    2017   2016   2017   2016
Operating income as reported   $ 133,070     $ 81,829     $ 302,198     $ 205,203  
Special items (pre-tax):                
Pension settlement charges (2)   5,283         5,283      
Loss on deconsolidation of Venezuelan subsidiary (3)               34,348  
Acquisition transaction and integration costs (4)   3,273         11,386      
Amortization of step up in value of  acquired inventories (4)   2,314         2,314      
Bargain purchase gain (4)   (51,585 )       (51,585 )    
Adjusted operating income (1)   $ 92,355     $ 81,829     $ 269,596     $ 239,551  
As a percent of total sales   13.8 %   14.4 %   14.4 %   14.0 %
                 
Net income as reported   $ 106,126     $ 60,049     $ 223,322     $ 145,004  
Special items (after-tax):                
Pension settlement charges (2)   3,260         3,260      
Loss on deconsolidation of Venezuelan subsidiary (3)               33,251  
Income tax valuation reversals (5)               (7,196 )
Acquisition transaction and integration costs (4)   2,229         8,457      
Amortization of step up in value of  acquired inventories (4)   1,745         1,745      
Bargain purchase gain (4)   (51,585 )       (51,585 )    
Adjusted net income (1)   $ 61,775     $ 60,049     $ 185,199     $ 171,059  
                 
Diluted earnings per share as reported   $ 1.59     $ 0.89     $ 3.35     $ 2.11  
Special items   (0.66 )       (0.57 )   0.38  
Adjusted diluted earnings per share (1)   $ 0.93     $ 0.89     $ 2.78     $ 2.49  
                 
Weighted average shares (diluted)   66,702     67,182     66,679     68,784  
(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 lump sum pension payments.
(3) Related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016.
(4) Related to the acquisition of Air Liquide Welding.
(5) 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 September 30,
Return on Invested Capital   2017   2016
Net income as reported   $ 276,717     $ 193,696  
Rationalization and asset impairment charges, net of tax of ($16)       450  
Pension settlement charges, net of tax of $2,023 and $2,438 in 2017 and 2016, respectively   3,260     3,969  
Loss on deconsolidation of Venezuelan subsidiary, net of tax of $1,097       33,251  
Income tax valuation reversals       (7,196 )
Venezuela currency devaluation       708  
Acquisition transaction and integration costs, net of tax of $2,929   8,457      
Amortization of step up in value of acquired inventories, net of tax of $569   1,745      
Bargain purchase gain   (51,585 )    
Adjusted net income (1)   $ 238,594     $ 224,878  
Plus: Interest expense, net of tax of $9,795 and $6,816 in 2017 and 2016, respectively   15,789     13,342  
Less: Interest income, net of tax of $1,614 and $596 in 2017 and 2016, respectively   2,602     1,182  
Adjusted net income before tax effected interest   $ 251,781     $ 237,038  
         
Invested Capital   September 30, 2017   September 30, 2016
Short-term debt   $ 2,135     $ 183,827  
Long-term debt, less current portion   704,804     359,831  
Total debt   706,939     543,658  
Total equity   945,928     752,917  
Invested capital   $ 1,652,867     $ 1,296,575  
         
Return on invested capital (1)(2)   15.2 %   18.3 %
 
(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.


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows
    Three Months Ended September 30,
    2017   2016
OPERATING ACTIVITIES:        
Net income   $ 106,126     $ 60,049  
Non-controlling interests in subsidiaries' loss   (15 )   (10 )
Net income including non-controlling interests   106,111     60,039  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Bargain purchase gain   (51,585 )    
Depreciation and amortization   18,451     16,263  
Equity earnings in affiliates, net   (141 )   (6 )
Pension expense and settlement charges   3,495     3,216  
Pension contributions and payments   (1,556 )   (582 )
Other non-cash items, net   (143 )   (1,742 )

Changes in operating assets and liabilities, net of effects from acquisitions:
       
Decrease in accounts receivable   15,706     10,437  
Decrease in inventories   2,231     7,819  
Decrease in trade accounts payable   (21,551 )   (8,306 )
Net change in other current assets and liabilities   22,978     24,309  
Net change in other long-term assets and liabilities   (329 )   1,854  
NET CASH PROVIDED BY OPERATING ACTIVITIES   93,667     113,301  
         
INVESTING ACTIVITIES:        
Capital expenditures   (10,828 )   (14,598 )
Acquisition of businesses, net of cash acquired   (72,468 )    
Proceeds from sale of property, plant and equipment   892     257  
Purchase of marketable securities   (75,619 )    
Proceeds from marketable securities   200      
NET CASH USED BY INVESTING ACTIVITIES   (157,823 )   (14,341 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   (394 )   23,989  
Proceeds from exercise of stock options   936     4,703  
Purchase of shares for treasury   (15,264 )   (85,661 )
Cash dividends paid to shareholders   (23,067 )   (21,533 )
Other financing activities   (372 )    
NET CASH USED BY FINANCING ACTIVITIES   (38,161 )   (78,502 )
         
Effect of exchange rate changes on Cash and cash equivalents   6,035     (549 )
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (96,282 )   19,909  
Cash and cash equivalents at beginning of period   395,735     237,019  
Cash and cash equivalents at end of period   $ 299,453     $ 256,928  
         
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
 
    Nine Months Ended September 30,
    2017   2016
OPERATING ACTIVITIES:        
Net income   $ 223,322     $ 145,004  
Non-controlling interests in subsidiaries' loss   (32 )   (32 )
Net income including non-controlling interests   223,290     144,972  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Loss on deconsolidation of Venezuelan subsidiary       34,348  
Bargain purchase gain   (51,585 )    
Depreciation and amortization   50,457     48,495  
Equity earnings in affiliates, net   (216 )   (64 )
Pension expense and settlement charges   816     12,472  
Pension contributions and payments   (2,724 )   (22,159 )
Other non-cash items, net   15,489     (7,137 )
Changes in operating assets and liabilities, net of effects from acquisitions:        
Increase in accounts receivable   (24,300 )   (11,956 )
Increase in inventories   (22,526 )   (7,673 )
(Decrease) increase in trade accounts payable   (8,932 )   13,922  
Net change in other current assets and liabilities   61,847     33,838  
Net change in other long-term assets and liabilities   3,738     1,122  
NET CASH PROVIDED BY OPERATING ACTIVITIES   245,354     240,180  
         
INVESTING ACTIVITIES:        
Capital expenditures   (38,959 )   (39,377 )
Acquisition of businesses, net of cash acquired   (72,468 )   (71,567 )
Proceeds from sale of property, plant and equipment   1,994     936  
Purchase of marketable securities   (145,553 )    
Proceeds from marketable securities   5,190      
Other investing activities       (283 )
NET CASH USED BY INVESTING ACTIVITIES   (249,796 )   (110,291 )
         
FINANCING ACTIVITIES:        
Net change in borrowings   (605 )   183,259  
Proceeds from exercise of stock options   14,333     10,418  
Purchase of shares for treasury   (23,012 )   (288,594 )
Cash dividends paid to shareholders   (69,083 )   (66,180 )
Other financing activities   (15,561 )   (18,244 )
NET CASH USED BY FINANCING ACTIVITIES   (93,928 )   (179,341 )
         
Effect of exchange rate changes on Cash and cash equivalents   18,644     2,197  
DECREASE IN CASH AND CASH EQUIVALENTS   (79,726 )   (47,255 )
Cash and cash equivalents at beginning of period   379,179     304,183  
Cash and cash equivalents at end of period   $ 299,453     $ 256,928  
         
Cash dividends paid per share   $ 1.05     $ 0.96  


Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)
 
    Americas Welding   International Welding   The Harris
Products
Group
  Corporate /
Eliminations
  Consolidated
Three months ended September 30, 2017                
Net sales   $ 398,289     $ 197,617     $ 73,585     $     $ 669,491  
Inter-segment sales   25,546     5,451     2,064     (33,061 )    
Total   $ 423,835     $ 203,068     $ 75,649     $ (33,061 )   $ 669,491  
                     
EBIT (1)   $ 68,813     $ 8,298     $ 9,244     $ 48,882     $ 135,237  
As a percent of total sales   16.2 %   4.1 %   12.2 %       20.2 %
Special items charges (gains) (3)   5,283     2,314         (48,312 )   (40,715 )
Adjusted EBIT (2)   $ 74,096     $ 10,612     $ 9,244     $ 570     $ 94,522  
As a percent of total sales   17.5 %   5.2 %   12.2 %       14.1 %
Three months ended September 30, 2016                
Net sales   $ 377,520     $ 119,564     $ 70,562     $     $ 567,646  
Inter-segment sales   22,386     3,688     1,856     (27,930 )    
Total   $ 399,906     $ 123,252     $ 72,418     $ (27,930 )   $ 567,646  
                     
EBIT (1)   $ 68,285     $ 5,796     $ 8,757     $ 913     $ 83,751  
As a percent of total sales   17.1 %   4.7 %   12.1 %       14.8 %
Special items charges (gains)                    
Adjusted EBIT (2)   $ 68,285     $ 5,796     $ 8,757     $ 913     $ 83,751  
As a percent of total sales   17.1 %   4.7 %   12.1 %       14.8 %
Nine months ended September 30, 2017                
Net sales   $ 1,186,760     $ 468,003     $ 222,483     $     $ 1,877,246  
Inter-segment sales   75,380     15,214     6,763     (97,357 )    
Total   $ 1,262,140     $ 483,217     $ 229,246     $ (97,357 )   $ 1,877,246  
                     
EBIT (1)   $ 212,034     $ 27,399     $ 27,491     $ 40,568     $ 307,492  
As a percent of total sales   16.8 %   5.7 %   12.0 %       16.4 %
Special items charges (gains) (3)   5,283     2,314         (40,199 )   (32,602 )
Adjusted EBIT (2)   $ 217,317     $ 29,713     $ 27,491     $ 369     $ 274,890  
As a percent of total sales   17.2 %   6.1 %   12.0 %       14.6 %
Nine months ended September 30, 2016                
Net sales   $ 1,124,900     $ 376,684     $ 209,202     $     $ 1,710,786  
Inter-segment sales   69,673     11,955     6,983     (88,611 )    
Total   $ 1,194,573     $ 388,639     $ 216,185     $ (88,611 )   $ 1,710,786  
                     
EBIT (1)   $ 194,924     $ 21,699     $ 25,752     $ (32,536 )   $ 209,839  
As a percent of total sales   16.3 %   5.6 %   11.9 %       12.3 %
Special items charges (gains) (4)               34,348     34,348  
Adjusted EBIT (2)   $ 194,924     $ 21,699     $ 25,752     $ 1,812     $ 244,187  
As a percent of total sales   16.3 %   5.6 %   11.9 %       14.3 %
 
(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 pension settlement charges and acquisition transaction and integration costs, amortization of step up in value of acquired inventories and a bargain purchase gain related to the 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 September 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   $ 377,520     $ 8,401     $ 1,140     $ 9,197     $ 2,031     $ 398,289  
International Welding   119,564     7,988     61,520     3,446     5,099     197,617  
The Harris Products Group   70,562     5,050         (2,604 )   577     73,585  
Consolidated   $ 567,646     $ 21,439     $ 62,660     $ 10,039     $ 7,707     $ 669,491  
                         
% Change                        
Americas Welding       2.2 %   0.3 %   2.4 %   0.5 %   5.5 %
International Welding       6.7 %   51.5 %   2.9 %   4.3 %   65.3 %
The Harris Products Group       7.2 %       (3.7 %)   0.8 %   4.3 %
Consolidated       3.8 %   11.0 %   1.8 %   1.4 %   17.9 %
                         
Nine Months Ended September 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   $ 1,124,900     $ 29,928     $ 5,832     $ 25,225     $ 875     $ 1,186,760  
International Welding   376,684     15,712     61,520     11,068     3,019     $ 468,003  
The Harris Products Group   209,202     10,982         806     1,493     $ 222,483  
Consolidated   $ 1,710,786     $ 56,622     $ 67,352     $ 37,099     $ 5,387     $ 1,877,246  
                         
Americas Welding
(excluding Venezuela)
  $ 1,114,086     $ 40,742     $ 5,832     $ 25,225     $ 875     $ 1,186,760  
Consolidated
(excluding Venezuela)
  $ 1,699,973     $ 67,435     $ 67,352     $ 37,099     $ 5,387     $ 1,877,246  
                         
% Change                        
Americas Welding       2.7 %   0.5 %   2.2 %   0.1 %   5.5 %
International Welding       4.2 %   16.3 %   2.9 %   0.8 %   24.2 %
The Harris Products Group       5.2 %       0.4 %   0.7 %   6.3 %
Consolidated       3.3 %   3.9 %   2.2 %   0.3 %   9.7 %
                         
Americas Welding
(excluding Venezuela)
      3.7 %   0.5 %   2.3 %   0.1 %   6.5 %
Consolidated
(excluding Venezuela) (1)
      4.0 %   4.0 %   2.2 %   0.3 %   10.4 %
                                   
(1) Venezuelan sales in the nine months ended September 30, 2016 were $11 million.

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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.