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Lincoln Electric Reports Fourth Quarter and Full Year 2013 Results

Feb 14 2014
Q4 EPS Increases 45% to $1.07, Adjusted EPS Increases 38% to $1.09
Full Year 2013 EPS Increases 16% to $3.54, Adjusted EPS Increases 19% to $3.77

CLEVELAND, Feb. 14, 2014 /PRNewswire/ --

Fourth Quarter and Full Year Highlights vs. Prior Year

 
  • Q4 Operating income up 39% to $119 million, or 16.6% of sales on a 4% increase in sales
  • Q4 Adjusted operating income up 32% to $120 million and up 350 bps to 16.8% of sales
  • Q4 Net income up 42% to $88 million; Adjusted net income $89 million, including $18 million from Venezuela
  • FY2013 Net income up 14% to $294 million; Adjusted net income $313 million, including $38 million from Venezuela
  • Q4 Cash flow from operations up 15% to $97 million in the fourth quarter; up 4% to $339 million in 2013
  • Returned $71 million to shareholders through share repurchases and dividends in Q4; returned $217 million in 2013

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported fourth quarter 2013 net income of $88.3 million, or $1.07 per diluted share.  Net income was $62.1 million, or $0.74 per diluted share, in the comparable 2012 period.  Adjusted net income was $89.2 million, or $1.09 per diluted share, compared to adjusted net income of $65.9 million, or $0.79 per diluted share, in the comparable 2012 period.

Sales increased 4.4% to $714.8 million in the fourth quarter 2013 versus $684.6 million in the comparable 2012 period.  This increase reflects higher volumes and acquisitions, which was partially offset by unfavorable foreign exchange translation.  Operating income for the fourth quarter increased 38.7% to $118.9 million, or 16.6% of sales, from $85.7 million, or 12.5% of sales, in the comparable 2012 period.  On an adjusted basis, operating income increased 32.1% to $119.9 million or 16.8% of sales, compared with $90.7 million, or 13.3% of sales in 2012.

The Company's Board of Directors declared a quarterly cash dividend of $0.23 per share, which was paid on January 15, 2014 to holders of record on December 31, 2013.  During the quarter, the Company returned $54.2 million to shareholders through the repurchase of 767,531 of the Company's common shares. 

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased to report solid fourth quarter and full year 2013 results that reflect strong execution of our initiatives, even in challenging and dynamic market conditions.  Our focus on favorable mix, optimized processes, and a strong pipeline of new products resulted in margin expansion, solid cash flow generation and accelerated returns to shareholders.  Most notably, we achieved a 120 basis point improvement in working capital efficiency to 17.6% of sales, record cash flows from operations, increased our return on invested capital to 18.9%, and returned over $217 million to shareholders through dividends and share repurchases. 

Looking ahead to 2014, we remain focused on serving our customers with innovative solutions, achieving margin improvements through the continued implementation of our commercial and operational initiatives and expect to benefit from modest end market improvements."

Full Year 2013 Summary

Sales for 2013 were steady at $2.9 billion versus the 2012 period, reflecting a 3.2% increase from acquisitions offset by reduced volumes and unfavorable foreign exchange.  Operating income increased 12.4% to $407.0 million, or 14.3% of sales, from $362.1 million, or 12.7% of sales in 2012.

Net income for 2013 was $293.8 million, or $3.54 per diluted share.  Net income was $257.4 million, or $3.06 per diluted share, in 2012.  Adjusted net income was $313.2 million, or $3.77 per diluted share, compared to adjusted net income of $265.8 million, or $3.16 per diluted share, in 2012. 

During the twelve months ended December 31, 2013, the Company made voluntary contributions of $75.2 million to its U.S. pension plans and returned $217.2 million to shareholders through the payment of $49.3 million in dividends and the repurchase of $167.9 million, or 2,721,903 of the Company's common shares.  The Company also invested $53.2 million in acquisitions during the year.

Venezuela

Venezuela is a highly inflationary economy under U.S. generally accepted accounting principles ("GAAP").  This highly inflationary economy drove higher prices and earnings in our Venezuelan operation during 2013.  In addition, financial results were impacted by an after-tax charge of $12.2 million related to the devaluation of the Venezuelan currency during the first half of 2013.

Fourth quarter 2013 net sales included $40.9 million from Venezuela.  Net income for the quarter included $17.7 million, or $0.22 per diluted share, from Venezuela.  On a full year 2013 basis, net sales included $109.1 million from Venezuela.  Net income for the full year included $25.6 million, or $0.31 per diluted share, from Venezuela.  Adjusted net income for the full year included $37.8 million, or $0.46 per diluted share, from Venezuela.

The impact to earnings of a further devaluation of the Venezuelan currency will be dependent upon movements in the applicable exchange rates and the amount of monetary assets and liabilities on the Venezuelan operation's balance sheet.  The bolivar-denominated monetary net asset position was $38.6 million at December 31, 2013 which includes $50.6 million of cash and cash equivalents translated at the official exchange rate of 6.3 bolivars to the U.S. dollar.  If in the future the Company were to convert bolivars at a rate other than the official exchange rate or the official exchange rate is revised, the Company may realize a loss to earnings.  For example, a future devaluation in the Venezuelan currency to a rate of 12.6 would result in the Company realizing additional charges of approximately $3.0 million to Cost of goods sold based on current inventory levels and $20.0 million to Selling, general and administrative expenses based upon the bolivar-denominated monetary net asset position at December 31, 2013.

The Company expects that the operating environment in Venezuela will continue to be a challenge due to continued economic uncertainty and the limited ability to convert bolivars to U.S. dollars.  The various restrictions on the Company's ability to effectively manage the Venezuelan operations could affect the ability to pay obligations and maintain normal production levels.

Webcast Information

A conference call to discuss fourth quarter 2013 financial results will be webcast live today, Friday, February 14, 2014, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://ir.lincolnelectric.com.  Listeners should go to the web site prior to the call to register and download and install any necessary audio software.  A replay of the webcast will be available on the Company's web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 36445529.  A telephonic replay will be available starting at 1:00 p.m. Eastern Time today and will end on Friday, February 28, 2014 at 11:59 p.m. Eastern Time.  To listen to the replay, please dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use confirmation code 36445529.  

Financial results for the fourth quarter 2013 can also be obtained at http://ir.lincolnelectric.com.

About Lincoln Electric

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

Non-GAAP Information

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

Forward-Looking Statements

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

         

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

       
         

Consolidated Statements of Income

       
   

Three months ended December 31,

 

Fav (Unfav) to Prior Year

   

2013

 

% of Sales

 

2012

 

% of Sales

 

$

 

%

Net sales

 

$

714,791

   

100.0

%

 

$

684,648

   

100.0

%

 

$

30,143

   

4.4

%

Cost of goods sold

 

471,744

   

66.0

%

 

471,616

   

68.9

%

 

(128)

   

 

Gross profit

 

243,047

   

34.0

%

 

213,032

   

31.1

%

 

30,015

   

14.1

%

Selling, general & administrative expenses

 

123,883

   

17.3

%

 

122,290

   

17.9

%

 

(1,593)

   

(1.3%)

 

Rationalization and asset impairment charges

 

259

   

   

5,037

   

0.7

%

 

4,778

   

94.9

%

Operating income

 

118,905

   

16.6

%

 

85,705

   

12.5

%

 

33,200

   

38.7

%

Interest income

 

868

   

0.1

%

 

1,340

   

0.2

%

 

(472)

   

(35.2%)

 

Equity earnings in affiliates

 

1,119

   

0.2

%

 

743

   

0.1

%

 

376

   

50.6

%

Other income

 

1,053

   

0.1

%

 

670

   

0.1

%

 

383

   

57.2

%

Interest expense

 

(557)

   

(0.1%)

   

(853)

   

(0.1%)

   

296

   

34.7

%

Income before income taxes

 

121,388

   

17.0

%

 

87,605

   

12.8

%

 

33,783

   

38.6

%

Income taxes

 

33,323

   

4.7

%

 

25,639

   

3.7

%

 

(7,684)

   

(30.0%)

 

Effective tax rate

 

27.5

%

     

29.3

%

     

1.8

%

   

Net income including non-controlling interests

 

88,065

   

12.3

%

 

61,966

   

9.1

%

 

26,099

   

42.1

%

Non-controlling interests in subsidiaries' loss

 

(259)

   

   

(118)

   

   

(141)

   

(119.5%)

 

Net income

 

$

88,324

   

12.4

%

 

$

62,084

   

9.1

%

 

$

26,240

   

42.3

%

                         

Basic earnings per share

 

$

1.09

       

$

0.75

       

$

0.34

   

45.3

%

Diluted earnings per share

 

$

1.07

       

$

0.74

       

$

0.33

   

44.6

%

Weighted average shares (basic)

 

81,132

       

82,651

             

Weighted average shares (diluted)

 

82,184

       

83,677

             
   

Twelve months ended December 31,

 

Fav (Unfav) to Prior Year

   

2013

 

% of Sales

 

2012

 

% of Sales

 

$

 

%

Net sales

 

$

2,852,671

   

100.0

%

 

$

2,853,367

   

100.0

%

 

$

(696)

   

 

Cost of goods sold

 

1,910,017

   

67.0

%

 

1,986,711

   

69.6

%

 

76,694

   

3.9

%

Gross profit

 

942,654

   

33.0

%

 

866,656

   

30.4

%

 

75,998

   

8.8

%

Selling, general & administrative expenses

 

527,206

   

18.5

%

 

495,221

   

17.4

%

 

(31,985)

   

(6.5%)

 

Rationalization and asset impairment charges

 

8,463

   

0.3

%

 

9,354

   

0.3

%

 

891

   

9.5

%

Operating income

 

406,985

   

14.3

%

 

362,081

   

12.7

%

 

44,904

   

12.4

%

Interest income

 

3,320

   

0.1

%

 

3,988

   

0.1

%

 

(668)

   

(16.8%)

 

Equity earnings in affiliates

 

4,806

   

0.2

%

 

5,007

   

0.2

%

 

(201)

   

(4.0%)

 

Other income

 

4,194

   

0.1

%

 

2,685

   

0.1

%

 

1,509

   

56.2

%

Interest expense

 

(2,864)

   

(0.1%)

   

(4,191)

   

(0.1%)

   

1,327

   

31.7

%

Income before income taxes

 

416,441

   

14.6

%

 

369,570

   

13.0

%

 

46,871

   

12.7

%

Income taxes

 

124,754

   

4.4

%

 

112,354

   

3.9

%

 

(12,400)

   

(11.0%)

 

Effective tax rate

 

30.0

%

     

30.4

%

     

0.4

%

   

Net income including non-controlling interests

 

291,687

   

10.2

%

 

257,216

   

9.0

%

 

34,471

   

13.4

%

Non-controlling interests in subsidiaries' loss

 

(2,093)

   

(0.1%)

   

(195)

   

   

(1,898)

   

(973.3%)

 

Net income

 

$

293,780

   

10.3

%

 

$

257,411

   

9.0

%

 

$

36,369

   

14.1

%

                         

Basic earnings per share

 

$

3.58

       

$

3.10

       

$

0.48

   

15.5

%

Diluted earnings per share

 

$

3.54

       

$

3.06

       

$

0.48

   

15.7

%

Weighted average shares (basic)

 

81,978

       

83,087

             

Weighted average shares (diluted)

 

83,042

       

84,175

             

 

 

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,

   

2013

 

2012

 

2013

 

2012

Operating income as reported

 

$

118,905

   

$

85,705

   

$

406,985

   

$

362,081

 

Special items (pre-tax):

               

Rationalization and asset impairment charges (1)

 

259

   

5,037

   

8,463

   

9,354

 

Loss on the sale of land (2)

 

705

   

   

705

   

 

Venezuelan currency devaluation (3)

 

   

   

12,198

   

 

Venezuelan statutory severance obligation (4)

 

   

   

   

1,381

 

Adjusted operating income (6)

 

$

119,869

   

$

90,742

   

$

428,351

   

$

372,816

 
                 

Net income as reported

 

$

88,324

   

$

62,084

   

$

293,780

   

$

257,411

 

Special items (after-tax):

               

Rationalization and asset impairment charges (1)

 

223

   

3,823

   

7,573

   

7,442

 

Loss on the sale of land (2)

 

705

   

   

705

   

 

Venezuelan currency devaluation (3)

 

   

   

12,198

   

 

Venezuelan statutory severance obligation (4)

 

   

   

   

906

 

Special items attributable to non-controlling

interests (5)

 

(47)

   

   

(1,068)

   

 

Adjusted net income (6)

 

$

89,205

   

$

65,907

   

$

313,188

   

$

265,759

 
                 

Diluted earnings per share as reported

 

$

1.07

   

$

0.74

   

$

3.54

   

$

3.06

 

Special items

 

0.02

   

0.05

   

0.23

   

0.10

 

Adjusted diluted earnings per share (6)

 

$

1.09

   

$

0.79

   

$

3.77

   

$

3.16

 
                 

Weighted average shares (diluted)

 

82,184

   

83,677

   

83,042

   

84,175

 
 

(1)  The three and twelve months ended December 31, 2013 include net charges associated with long-lived asset impairments and severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets at rationalized operations.

(2)  Represents the loss realized related to the sale of land.

(3)  Represents the impact of the devaluation of the Venezuelan currency.

(4)  Represents an unfavorable adjustment due to a change in Venezuelan labor law, which provides for increased employee severance obligations.

(5)  The three months ended December 31, 2013 represents the portion of land sale attributable to non-controlling interests. The three and twelve months ended December 31, 2013 include the portion of land sale and the long-lived asset impairments attributable to non-controlling interests.

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

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands)

(Unaudited)

 

Balance Sheet Highlights

 
 

Selected Consolidated Balance Sheet Data

 

December 31, 2013

 

December 31, 2012

Cash and cash equivalents

 

$

299,825

   

$

286,464

 

Total current assets

 

1,130,775

   

1,132,816

 

Property, plant and equipment, net

 

484,005

   

486,236

 

Total assets

 

2,151,867

   

2,089,863

 

Total current liabilities

 

456,779

   

440,267

 

Short-term debt (1)

 

15,296

   

18,676

 

Long-term debt

 

3,791

   

1,599

 

Total equity

 

1,530,688

   

1,358,321

 
         

Net Operating Working Capital

 

December 31, 2013

 

December 31, 2012

Accounts receivable

 

$

367,134

   

$

360,662

 

Inventory

 

349,963

   

364,890

 

Trade accounts payable

 

212,799

   

209,647

 

Net operating working capital

 

$

504,298

   

$

515,905

 
         

Net operating working capital to net sales (2)

 

17.6

%

 

18.8

%

         

Invested Capital

 

December 31, 2013

 

December 31, 2012

Short-term debt (1)

 

$

15,296

   

$

18,676

 

Long-term debt

 

3,791

   

1,599

 

Total debt

 

19,087

   

20,275

 

Total equity

 

1,530,688

   

1,358,321

 

Invested capital

 

$

1,549,775

   

$

1,378,596

 
         

Total debt / invested capital

 

1.2

%

 

1.5

%

Return on invested capital (3)

 

18.9

%

 

18.7

%

 

(1)  Includes current portion of long-term debt.

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

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

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Condensed Consolidated Statements of Cash Flows

 
 
   

Three months ended December 31,

   

2013

 

2012

OPERATING ACTIVITIES:

       

Net income

 

$

88,324

   

$

62,084

 

Non-controlling interests in subsidiaries' loss

 

(259)

   

(118)

 

Net income including non-controlling interests

 

88,065

   

61,966

 

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

   provided by operating activities:

       

Rationalization and asset impairment charges

 

43

   

1,383

 

Depreciation and amortization

 

17,002

   

17,114

 

Equity (earnings) loss in affiliates, net

 

(347)

   

1,609

 

Pension expense

 

7,513

   

8,849

 

Pension contributions and payments

 

(2,939)

   

(11,832)

 

Other non-cash items, net

 

(296)

   

3,677

 

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

       

Decrease in accounts receivable

 

12,545

   

44,009

 

Decrease in inventories

 

23,199

   

35,118

 

Increase in trade accounts payable

 

33,497

   

17,292

 

Net change in other current assets and liabilities

 

(80,601)

   

(61,032)

 

Net change in other long-term assets and liabilities

 

(878)

   

(34,010)

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

96,803

   

84,143

 
         

INVESTING ACTIVITIES:

       

Capital expenditures

 

(16,324)

   

(13,408)

 

Acquisition of businesses, net of cash acquired

 

(48,225)

   

(81,751)

 

Proceeds from sale of property, plant and equipment

 

597

   

849

 

Other investing activities

 

2,500

   

 

NET CASH USED BY INVESTING ACTIVITIES

 

(61,452)

   

(94,310)

 
         

FINANCING ACTIVITIES:

       

Net change in borrowings

 

511

   

(1,302)

 

Proceeds from exercise of stock options

 

4,220

   

6,081

 

Excess tax benefits from stock-based compensation

 

3,629

   

2,225

 

Purchase of shares for treasury

 

(54,238)

   

(20,863)

 

Cash dividends paid to shareholders

 

(16,290)

   

(30,602)

 

Transactions with non-controlling interests

 

(3,278)

   

 

NET CASH USED BY FINANCING ACTIVITIES

 

(65,446)

   

(44,461)

 
         

Effect of exchange rate changes on Cash and cash equivalents

 

(389)

   

417

 

DECREASE IN CASH AND CASH EQUIVALENTS

 

(30,484)

   

(54,211)

 

Cash and cash equivalents at beginning of period

 

330,309

   

340,675

 

Cash and cash equivalents at end of period

 

$

299,825

   

$

286,464

 
         

Cash dividends paid per share

 

$

0.20

   

$

0.37

 
                 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

Condensed Consolidated Statements of Cash Flows

 
 
   

Twelve months ended December 31,

   

2013

 

2012

OPERATING ACTIVITIES:

       

Net income

 

$

293,780

   

$

257,411

 

Non-controlling interests in subsidiaries' loss

 

(2,093)

   

(195)

 

Net income including non-controlling interests

 

291,687

   

257,216

 

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

   provided by operating activities:

       

Rationalization and asset impairment charges

 

5,092

   

1,740

 

Depreciation and amortization

 

68,883

   

65,334

 

Equity (earnings) loss in affiliates, net

 

(1,660)

   

160

 

Pension expense

 

29,774

   

35,439

 

Pension contributions and payments

 

(87,356)

   

(69,646)

 

Other non-cash items, net

 

29,461

   

9,588

 

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

       

(Increase) decrease in accounts receivable

 

(5,437)

   

57,759

 

Decrease in inventories

 

13,310

   

28,286

 

Increase in trade accounts payable

 

794

   

16,110

 

Net change in other current assets and liabilities

 

(4,974)

   

12,381

 

Net change in other long-term assets and liabilities

 

(680)

   

(86,883)

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

338,894

   

327,484

 
         

INVESTING ACTIVITIES:

       

Capital expenditures

 

(76,015)

   

(52,715)

 

Acquisition of businesses, net of cash acquired

 

(53,161)

   

(134,602)

 

Proceeds from sale of property, plant and equipment

 

1,393

   

1,387

 

Other investing activities

 

(1,717)

   

(1,541)

 

NET CASH USED BY INVESTING ACTIVITIES

 

(129,500)

   

(187,471)

 
         

FINANCING ACTIVITIES:

       

Net change in borrowings

 

(1,840)

   

(89,303)

 

Proceeds from exercise of stock options

 

20,297

   

18,776

 

Excess tax benefits from stock-based compensation

 

10,602

   

7,819

 

Purchase of shares for treasury

 

(167,879)

   

(81,018)

 

Cash dividends paid to shareholders

 

(49,277)

   

(73,112)

 

Transactions with non-controlling interests

 

(6,087)

   

 

NET CASH USED BY FINANCING ACTIVITIES

 

(194,184)

   

(216,838)

 
         

Effect of exchange rate changes on Cash and cash equivalents

 

(1,849)

   

2,188

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

13,361

   

(74,637)

 

Cash and cash equivalents at beginning of period

 

286,464

   

361,101

 

Cash and cash equivalents at end of period

 

$

299,825

   

$

286,464

 
         

Cash dividends paid per share

 

$

0.60

   

$

0.88

 
                 

 

 

Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)

 
 
   

North

America

Welding

 

Europe

Welding

 

Asia Pacific

Welding

 

South

America

Welding

 

The Harris

Products

Group

 

Corporate /

Eliminations

 

Consolidated

Three months ended December 31, 2013 

                               

Net sales

 

$

410,033

   

$

111,874

   

$

63,170

   

$

63,303

   

$

66,411

   

$

   

$

714,791

 

Inter-segment sales

 

27,385

   

6,046

   

2,327

   

11

   

2,396

   

(38,165)

   

 

Total

 

$

437,418

   

$

117,920

   

$

65,497

   

$

63,314

   

$

68,807

   

$

(38,165)

   

$

714,791

 
                             

EBIT (1)

 

$

83,902

   

$

7,752

   

$

(792)

   

$

25,187

   

$

6,415

   

$

(1,387)

   

$

121,077

 

As a percent of total sales

 

19.2

%

 

6.6

%

 

(1.2%)

   

39.8

%

 

9.3

%

     

16.9

%

Special items charge (2)

 

$

(57)

   

$

381

   

$

640

   

$

   

$

   

$

   

$

964

 

EBIT, as adjusted (4)

 

$

83,845

   

$

8,133

   

$

(152)

   

$

25,187

   

$

6,415

   

$

(1,387)

   

$

122,041

 

As a percent of total sales

 

19.2

%

 

6.9

%

 

(0.2%)

   

39.8

%

 

9.3

%

     

17.1

%

Three months ended December 31, 2012

                       

Net sales

 

$

392,939

   

$

107,507

   

$

70,223

   

$

39,931

   

$

74,048

   

$

   

$

684,648

 

Inter-segment sales

 

29,676

   

3,870

   

3,188

   

   

1,944

   

(38,678)

   

 

Total

 

$

422,615

   

$

111,377

   

$

73,411

   

$

39,931

   

$

75,992

   

$

(38,678)

   

$

684,648

 
                             

EBIT (1)

 

$

75,925

   

$

3,914

   

$

(5,090)

   

$

4,829

   

$

5,544

   

$

1,996

   

$

87,118

 

As a percent of total sales

 

18.0

%

 

3.5

%

 

(6.9%)

   

12.1

%

 

7.3

%

     

12.7

%

Special items charge (3)

 

$

273

   

$

1,068

   

$

3,696

   

$

   

$

   

$

   

$

5,037

 

EBIT, as adjusted (4)

 

$

76,198

   

$

4,982

   

$

(1,394)

   

$

4,829

   

$

5,544

   

$

1,996

   

$

92,155

 

As a percent of total sales

 

18.0

%

 

4.5

%

 

(1.9%)

   

12.1

%

 

7.3

%

     

13.5

%

Twelve months ended December 31, 2013

                       

Net sales

 

$

1,652,769

   

$

429,548

   

$

266,282

   

$

195,895

   

$

308,177

   

$

   

$

2,852,671

 

Inter-segment sales

 

127,254

   

19,911

   

14,906

   

233

   

9,605

   

(171,909)

   

 

Total

 

$

1,780,023

   

$

449,459

   

$

281,188

   

$

196,128

   

$

317,782

   

$

(171,909)

   

$

2,852,671

 
                             

EBIT (1)

 

$

317,455

   

$

34,202

   

$

(4,256)

   

$

45,108

   

$

27,826

   

$

(4,350)

   

$

415,985

 

As a percent of total sales

 

17.8

%

 

7.6

%

 

(1.5%)

   

23.0

%

 

8.8

%

     

14.6

%

Special items charge (2)

 

$

1,052

   

$

2,045

   

$

6,071

   

$

12,198

   

$

   

$

   

$

21,366

 

EBIT, as adjusted (4)

 

$

318,507

   

$

36,247

   

$

1,815

   

$

57,306

   

$

27,826

   

$

(4,350)

   

$

437,351

 

As a percent of total sales

 

17.9

%

 

8.1

%

 

0.6

%

 

29.2

%

 

8.8

%

     

15.3

%

Twelve months ended December 31, 2012 

                       

Net sales

 

$

1,580,818

   

$

452,227

   

$

324,482

   

$

161,483

   

$

334,357

   

$

   

$

2,853,367

 

Inter-segment sales

 

131,062

   

16,048

   

14,829

   

38

   

8,549

   

(170,526)

   

 

Total

 

$

1,711,880

   

$

468,275

   

$

339,311

   

$

161,521

   

$

342,906

   

$

(170,526)

   

$

2,853,367

 
                             

EBIT (1)

 

$

292,243

   

$

33,765

   

$

2,254

   

$

16,920

   

$

29,477

   

$

(4,886)

   

$

369,773

 

As a percent of total sales

 

17.1

%

 

7.2

%

 

0.7

%

 

10.5

%

 

8.6

%

     

13.0

%

Special items charge (3)

 

$

827

   

$

3,534

   

$

4,993

   

$

1,381

   

$

   

$

   

$

10,735

 

EBIT, as adjusted (4)

 

$

293,070

   

$

37,299

   

$

7,247

   

$

18,301

   

$

29,477

   

$

(4,886)

   

$

380,508

 

As a percent of total sales

 

17.1

%

 

8.0

%

 

2.1

%

 

11.3

%

 

8.6

%

     

13.3

%

 

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

(2)  Special items in the three and twelve months ended December 31, 2013 include net rationalization and asset impairment charges and a loss recognized on the sale of land. The twelve months ended December 31, 2013 special charges also include the impact of the devaluation of the Venezuelan currency.

(3)  Special items in the three and twelve months ended December 31, 2012 include net rationalization and asset impairment charges. The twelve months ended December 31, 2012 special charges also include an unfavorable adjustment due to a change in Venezuelan labor law, which provides for increased employee severance obligations.

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

 

 

 

Lincoln Electric Holdings, Inc.

Change in Net Sales by Segment

(In thousands)

(Unaudited)

 

Three Months Ended December 31st Change in Net Sales by Segment

 
       

Change in Net Sales due to:

   
   

Net Sales

2012

 

Volume

 

Acquisitions

 

Price

 

Foreign

Exchange

 

Net Sales

2013

Operating Segments

                       

North America Welding

 

$

392,939

   

$

5,880

   

$

12,970

   

$

307

   

$

(2,063)

   

$

410,033

 

Europe Welding

 

107,507

   

4,726

   

   

(2,774)

   

2,415

   

111,874

 

Asia Pacific Welding

 

70,223

   

(3,994)

   

   

(974)

   

(2,085)

   

63,170

 

South America Welding

 

39,931

   

11,723

   

   

13,866

   

(2,217)

   

63,303

 

The Harris Products Group

 

74,048

   

3,106

   

   

(10,327)

   

(416)

   

66,411

 

Consolidated

 

$

684,648

   

$

21,441

   

$

12,970

   

$

98

   

$

(4,366)

   

$

714,791

 

% Change

                       

North America Welding

     

1.5

%

 

3.3

%

 

0.1

%

 

(0.5%)

   

4.4

%

Europe Welding

     

4.4

%

 

   

(2.6%)

   

2.2

%

 

4.1

%

Asia Pacific Welding

     

(5.7%)

   

   

(1.4%)

   

(3.0%)

   

(10.0%)

 

South America Welding

     

29.4

%

 

   

34.7

%

 

(5.6%)

   

58.5

%

The Harris Products Group

     

4.2

%

 

   

(13.9%)

   

(0.6%)

   

(10.3%)

 

Consolidated

     

3.1

%

 

1.9

%

 

   

(0.6%)

   

4.4

%

                                   

Twelve Months Ended December 31st Change in Net Sales by Segment

                                   
       

Change in Net Sales due to:

   
   

Net Sales

2012

 

Volume

 

Acquisitions

 

Price

 

Foreign

Exchange

 

Net Sales

2013

Operating Segments

                       

North America Welding

 

$

1,580,818

   

$

(22,962)

   

$

91,442

   

$

7,785

   

$

(4,314)

   

$

1,652,769

 

Europe Welding

 

452,227

   

(18,518)

   

   

(5,696)

   

1,535

   

429,548

 

Asia Pacific Welding

 

324,482

   

(48,964)

   

   

(4,947)

   

(4,289)

   

266,282

 

South America Welding

 

161,483

   

13,269

   

   

29,730

   

(8,587)

   

195,895

 

The Harris Products Group

 

334,357

   

1,276

   

   

(24,748)

   

(2,708)

   

308,177

 

Consolidated

 

$

2,853,367

   

$

(75,899)

   

$

91,442

   

$

2,124

   

$

(18,363)

   

$

2,852,671

 

% Change

                       

North America Welding

     

(1.5%)

   

5.8

%

 

0.5

%

 

(0.3%)

   

4.6

%

Europe Welding

     

(4.1%)

   

   

(1.3%)

   

0.3

%

 

(5.0%)

 

Asia Pacific Welding

     

(15.1%)

   

   

(1.5%)

   

(1.3%)

   

(17.9%)

 

South America Welding

     

8.2

%

 

   

18.4

%

 

(5.3%)

   

21.3

%

The Harris Products Group

     

0.4

%

 

   

(7.4%)

   

(0.8%)

   

(7.8%)

 

Consolidated

     

(2.7%)

   

3.2

%

 

0.1

%

 

(0.6%)

   

 
 

 

SOURCE Lincoln Electric Holdings, Inc.

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