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Lincoln Electric Reports Fourth Quarter and Full Year 2021 Results

Feb 10 2022

 


Fourth Quarter 2021 Highlights
 
  • Net sales increase 21.7% to record $844.3 million on 19.0% higher organic sales
     
  • Operating income margin of 14.3%; Adjusted operating income margin of 14.5%
     
  • EPS increases 15.7% to $1.25; Adjusted EPS increases 29.8% to record $1.61

Full Year 2021 Highlights
 
  • Record Net sales of $3.2 billion with 19.3% higher organic sales
     
  • Operating income margin of 14.3%; Adjusted operating income margin of 14.8%
     
  • EPS increases 34.5% to $4.60; Adjusted EPS increases 49.9% to record $6.22
     
  • ROIC increases 620 basis points to 23.9%
     
  • $286 million returned to shareholders through dividends and share repurchases

CLEVELAND, Feb. 10, 2022 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2021 net income of $74.4 million, or diluted earnings per share (EPS) of $1.25, which includes special item after-tax charges of $21.8 million, or $0.36 EPS. Special item charges primarily relate to the termination of a pension plan. This compares with prior year period net income of $65.1 million, or $1.08 EPS, which included special item after-tax charges of $9.9 million, or $0.16 EPS. Excluding these items, fourth quarter 2021 Adjusted net income was $96.2 million, or $1.61 Adjusted EPS. This compares with Adjusted net income of $75.0 million, or $1.24 adjusted EPS, in the prior year period.

Fourth quarter 2021 sales increased 21.7% to $844.3 million from a 19.0% increase in organic sales and a 4.7% benefit from acquisitions, partially offset by 2.0% unfavorable foreign exchange. Operating income for the fourth quarter 2021 was $120.3 million, or 14.3% of sales, including special item charges of $1.8 million. This compares with operating income of $83.4 million, or 12.0% of sales, in the prior year period. Excluding special items, Adjusted operating income was $122.2 million, or 14.5% of sales, as compared with $92.9 million, or 13.4% of sales, in the prior year period.

“We finished the year with record sales and adjusted EPS while navigating a challenging operating environment,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. “Our team did an outstanding job during another rigorous year putting our customers first while advancing our strategic initiatives, innovation, and operational excellence.” Mapes continued, “Looking ahead, we are well-positioned to capitalize on growth opportunities as conditions improve and capital investments accelerate, and are raising our 2025 Higher Standard strategy growth and profitability goals to reflect the superior value we will generate through this cycle.”

Twelve Months 2021 Summary

Net income for the twelve months ended December 31, 2021 was $276.5 million, or $4.60 EPS. This compares with $206.1 million, or $3.42 EPS, in 2020. Reported EPS includes special item after-tax charges of $96.9 million or $1.62 EPS, as compared with special item after-tax net charges of $43.8 million, or $0.73 EPS in 2020. Excluding these items, full year 2021 Adjusted net income for the year ended December 31, 2021 increased 49.4% to $373.3 million, or $6.22 Adjusted EPS, compared with $249.9 million, or $4.15 Adjusted EPS, in 2020.

Sales increased 21.8% to $3.2 billion in the twelve months ended December 31, 2021 from a 19.3% increase in organic sales, a 1.9% benefit from acquisitions and 0.6% favorable foreign exchange. Operating income for full year 2021 was $461.7 million, or 14.3% of sales, as compared with $282.1 million, or 10.6% of sales, in 2020. Excluding special items, Adjusted operating income was $479.2 million, or 14.8% of sales, as compared with $328.3 million, or 12.4% of sales, in 2020.

Webcast Information

A conference call to discuss fourth quarter 2021 financial results will be webcast live today, February 10, 2022, at 10:00 a.m., Eastern Time.  This webcast is accessible at https://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.

If investors would like to ask questions, please dial (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 2165948. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2021 can also be obtained at https://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the engineering, design, and manufacturing of advanced arc welding solutions, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment, and has a leading global position in brazing and soldering alloys. Lincoln is recognized as the Welding Expert™ for its leading material science, software development, automation engineering, and application expertise, which advance customers’ fabrication capabilities to help them build a better world. Headquartered in Cleveland, Ohio, Lincoln has 56 manufacturing locations in 19 countries and a worldwide network of distributors and sales offices serving customers in over 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at https://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Organic sales, Cash conversion 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, financial 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 acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as political unrest, acts of terror, natural disasters and pandemics, including the current coronavirus disease ("COVID-19") pandemic, 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, 2020.


 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Consolidated Statements of Income

                                 
                           Fav (Unfav) to  
    Three Months Ended December 31,    Prior Year  
    2021   % of Sales      2020      % of Sales   $   %  
Net sales   $ 844,251     100.0   % $ 693,794     100.0 % $ 150,457     21.7   %
Cost of goods sold     571,594     67.7   %   464,540     67.0 %   (107,054 )   (23.0 ) %
Gross profit     272,657     32.3   %   229,254     33.0 %   43,403     18.9   %
Selling, general & administrative expenses     150,758     17.9   %   136,362     19.7 %   (14,396 )   (10.6 ) %
Rationalization and asset impairment charges     1,550     0.2   %   9,452     1.4 %   7,902     83.6   %
Operating income     120,349     14.3   %   83,440     12.0 %   36,909     44.2   %
Interest expense, net     5,478     0.6   %   5,082     0.7 %   (396 )   (7.8 ) %
Other income (expense)     (43,302 )   (5.1 ) %   2,774     0.4 %   (46,076 )   (1,661.0 ) %
Income before income taxes     71,569     8.5   %   81,132     11.7 %   (9,563 )   (11.8 ) %
Income taxes     (2,841 )   (0.3 ) %   16,062     2.3 %   18,903     117.7   %
Effective tax rate     (4.0 ) %       19.8   %       23.8   %    
Net income including non-controlling interests     74,410     8.8   %   65,070     9.4 %   9,340     14.4   %
Non-controlling interests in subsidiaries’ income (loss)     (17 )         (8 )       (9 )   112.5   %
Net income   $ 74,427     8.8   % $ 65,078     9.4 % $ 9,349     14.4   %
                                 
Basic earnings per share   $ 1.26         $ 1.09         $ 0.17     15.6   %
Diluted earnings per share   $ 1.25         $ 1.08         $ 0.17     15.7   %
Weighted average shares (basic)     58,842           59,567                  
Weighted average shares (diluted)     59,637           60,301                  

 

                                   
                             Fav (Unfav) to  
    Twelve Months Ended December 31,   Prior Year  
    2021   % of Sales      2020   % of Sales      $   %  
Net sales   $ 3,234,180     100.0   % $ 2,655,400     100.0 % $ 578,780     21.8   %
Cost of goods sold     2,165,575     67.0   %   1,784,059     67.2 %   (381,516 )   (21.4 ) %
Gross profit     1,068,605     33.0   %   871,341     32.8 %   197,264     22.6   %
Selling, general & administrative expenses     597,109     18.5   %   543,802     20.5 %   (53,307 )   (9.8 ) %
Rationalization and asset impairment charges     9,827     0.3   %   45,468     1.7 %   35,641     78.4   %
Operating income     461,669     14.3   %   282,071     10.6 %   179,598     63.7   %
Interest expense, net     22,214     0.7   %   21,973     0.8 %   (241 )   (1.1 ) %
Other income (expense)     (114,457 )   (3.5 ) %   3,942     0.1 %   (118,399 )   (3,003.5 ) %
Income before income taxes     324,998     10.0   %   264,040     9.9 %   60,958     23.1   %
Income taxes     48,418     1.5   %   57,896     2.2 %   9,478     16.4   %
Effective tax rate     14.9   %       21.9   %       7.0   %    
Net income including non-controlling interests     276,580     8.6   %   206,144     7.8 %   70,436     34.2   %
Non-controlling interests in subsidiaries’ income (loss)     114           29         85     293.1   %
Net income   $ 276,466     8.5   % $ 206,115     7.8 % $ 70,351     34.1   %
                                   
Basic earnings per share   $ 4.66         $ 3.46         $ 1.20     34.7   %
Diluted earnings per share   $ 4.60         $ 3.42         $ 1.18     34.5   %
Weighted average shares (basic)     59,309           59,633                  
Weighted average shares (diluted)     60,062           60,248                  


 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)

Balance Sheet Highlights

               
Selected Consolidated Balance Sheet Data      December 31, 2021      December 31, 2020  
Cash and cash equivalents   $ 192,958   $ 257,279  
Accounts receivable, net     429,074     373,487  
Inventories     539,919     381,258  
Total current assets     1,289,593     1,112,343  
Property, plant and equipment, net     511,744     522,092  
Total assets     2,592,307     2,314,453  
Trade accounts payable     330,230     256,530  
Total current liabilities     755,905     549,449  
Short-term debt (1)     52,730     2,734  
Long-term debt, less current portion     717,089     715,456  
Total equity     863,909     790,250  
               
Operating Working Capital   December 31, 2021   December 31, 2020  
Average operating working capital to Net sales (2)     16.3 %   17.4 %
               
Invested Capital   December 31, 2021   December 31, 2020  
Short-term debt (1)   $ 52,730   $ 2,734  
Long-term debt, less current portion     717,089     715,456  
Total debt     769,819     718,190  
Total equity     863,909     790,250  
Invested capital   $ 1,633,728   $ 1,508,440  
               
Total debt / invested capital     47.1 %   47.6 %

 

  (1)   Includes current portion of long-term debt.
  (2)   Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.


 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

 Non-GAAP Financial Measures

                             
     Three Months Ended December 31,      Twelve Months Ended December 31,  
    2021   2020     2021   2020  
Operating income as reported   $ 120,349     $ 83,440       $ 461,669     $ 282,071    
Special items (pre-tax):                            
Rationalization and asset impairment charges (2)     1,550       9,452         9,827       45,468    
Acquisition transaction costs (3)                   1,923          
Amortization of step up in value of acquired inventories (4)     273               5,804       806    
Adjusted operating income (1)   $ 122,172     $ 92,892       $ 479,223     $ 328,345    
As a percent of total sales     14.5   %   13.4   %     14.8   %   12.4   %
                             
Net income as reported   $ 74,427     $ 65,078       $ 276,466     $ 206,115    
Special items:                            
Rationalization and asset impairment charges (2)     1,550       9,452         9,827       45,468    
Acquisition transaction costs (3)                   1,923          
Pension settlement charges (5)     46,404       1,597         126,502       8,119    
Amortization of step up in value of acquired inventories (4)     273               5,804       806    
Tax effect of Special items (6)     (26,451 )     (1,131 )       (47,188 )     (10,594 )  
Adjusted net income (1)     96,203       74,996         373,334       249,914    
Non-controlling interests in subsidiaries’ income (loss)     (17 )     (8 )       114       29    
Interest expense, net     5,478       5,082         22,214       21,973    
Income taxes as reported     (2,841 )     16,062         48,418       57,896    
Tax effect of Special items (6)     26,451       1,131         47,188       10,594    
Adjusted EBIT (1)   $ 125,274     $ 97,263       $ 491,268     $ 340,406    
                             
Effective tax rate as reported     (4.0 ) %   19.8   %     14.9   %   21.9   %
Net special item tax impact     23.7   %   (1.1 ) %     5.5   %   (0.4 ) %
Adjusted effective tax rate (1)     19.7   %   18.7   %     20.4   %   21.5   %
                             
Diluted earnings per share as reported   $ 1.25     $ 1.08       $ 4.60     $ 3.42    
Special items per share     0.36       0.16         1.62       0.73    
Adjusted diluted earnings per share (1)   $ 1.61     $ 1.24       $ 6.22     $ 4.15    
                             
Weighted average shares (diluted)     59,637       60,301         60,062       60,248    

 

  (1)   Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate and Adjusted diluted earnings per share are non-GAAP financial measures. Refer to Non-GAAP Information section.
  (2)   Primarily related to severance, gains or losses on the disposal of assets and asset impairments of long-lived assets.
  (3)   Related to acquisitions and are included in Selling, general & administrative expenses.
  (4)   Related to acquisitions and are included in Cost of goods sold.
  (5)   Settlement charges related to lump sum pension payments and annuity purchase associated with the termination of a pension plan and are included in Other income (expense).
  (6)   Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.



Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Non-GAAP Financial Measures

               
       Twelve Months Ended December 31,   
Return on Invested Capital      2021      2020  
Net income as reported   $ 276,466     $ 206,115    
Rationalization and asset impairment charges     9,827       45,468    
Acquisition transaction costs     1,923          
Pension settlement charges     126,502       8,119    
Amortization of step up in value of acquired inventories     5,804       806    
Tax effect of Special items (2)     (47,188 )     (10,594 )  
Adjusted net income (1)   $ 373,334     $ 249,914    
Plus: Interest expense, net of tax of $5,987 and $6,026 in 2021 and 2020, respectively     17,794       17,933    
Less: Interest income, net of tax of $395 and $500 in 2021 and 2020, respectively     1,172       1,486    
Adjusted net income before tax-effected interest   $ 389,956     $ 266,361    
               
Invested Capital   December 31, 2021   December 31, 2020  
Short-term debt   $ 52,730     $ 2,734    
Long-term debt, less current portion     717,089       715,456    
Total debt     769,819       718,190    
Total equity     863,909       790,250    
Invested capital   $ 1,633,728     $ 1,508,440    
               
Return on invested capital (1)     23.9   %   17.7   %

 

  (1)   Adjusted net income and Return on invested capital are non-GAAP financial measures. Refer to Non-GAAP Information section.
  (2)   Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.


 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Condensed Consolidated Statements of Cash Flows

           
  Three Months Ended December 31, 
  2021   2020
OPERATING ACTIVITIES:          
Net income $ 74,427     $ 65,078  
Non-controlling interests in subsidiaries’ income (loss)   (17 )     (8 )
Net income including non-controlling interests   74,410       65,070  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:          
Rationalization and asset impairment net charges   108       (92 )
Depreciation and amortization   20,588       19,926  
Equity earnings in affiliates, net   (100 )     (85 )
Pension settlement charges   46,404       1,597  
Other non-cash items, net   (10,777 )     3,617  
Changes in operating assets and liabilities, net of effects from acquisitions:          
Decrease in accounts receivable   5,368       10,433  
(Increase) decrease in inventories   (25,491 )     26,181  
Increase in trade accounts payable   27,413       24,414  
Net change in other current assets and liabilities   (34,580 )     (9,621 )
Net change in other long-term assets and liabilities   6,595       (5,639 )
NET CASH PROVIDED BY OPERATING ACTIVITIES   109,938       135,801  
           
INVESTING ACTIVITIES:          
Capital expenditures   (16,091 )     (22,085 )
Acquisition of businesses, net of cash acquired   2,499        
Proceeds from sale of property, plant and equipment   2,934       710  
Other investing activities         2,321  
NET CASH USED BY INVESTING ACTIVITIES   (10,658 )     (19,054 )
           
FINANCING ACTIVITIES:          
Net change in borrowings   13,673       1,375  
Proceeds from exercise of stock options   11,311       9,231  
Purchase of shares for treasury   (60,678 )     (257 )
Cash dividends paid to shareholders   (30,134 )     (29,173 )
NET CASH USED BY FINANCING ACTIVITIES   (65,828 )     (18,824 )
           
Effect of exchange rate changes on Cash and cash equivalents   (1,053 )     6,877  
INCREASE IN CASH AND CASH EQUIVALENTS   32,399       104,800  
Cash and cash equivalents at beginning of period   160,559       152,479  
Cash and cash equivalents at end of period $ 192,958     $ 257,279  
           
Cash dividends paid per share $ 0.51     $ 0.49  


 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

             
       Year Ended December 31, 
    2021   2020
OPERATING ACTIVITIES:            
Net income   $ 276,466     $ 206,115  
Non-controlling interests in subsidiaries’ income (loss)     114       29  
Net income including non-controlling interests     276,580       206,144  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:            
Rationalization and asset impairment net (gains) charges     (1,054 )     21,835  
Depreciation and amortization     81,146       80,492  
Equity earnings in affiliates, net     (499 )     (408 )
Pension settlement charges     126,502       8,119  
Other non-cash items, net     (21,744 )     (5,675 )
Changes in operating assets and liabilities, net of effects from acquisitions:            
(Increase) decrease in accounts receivable     (65,844 )     3,582  
(Increase) decrease in inventories     (154,347 )     22,751  
Increase (decrease) in trade accounts payable     82,394       (17,919 )
Net change in other current assets and liabilities     44,379       37,021  
Net change in other long-term assets and liabilities     (2,450 )     (4,580 )
NET CASH PROVIDED BY OPERATING ACTIVITIES     365,063       351,362  
             
INVESTING ACTIVITIES:            
Capital expenditures     (62,531 )     (59,201 )
Acquisition of businesses, net of cash acquired     (156,106 )      
Proceeds from sale of property, plant and equipment     6,781       7,667  
Other investing activities     6,500       2,321  
NET CASH USED BY INVESTING ACTIVITIES     (205,356 )     (49,213 )
             
FINANCING ACTIVITIES:            
Net change in borrowings     45,968       (31,760 )
Proceeds from exercise of stock options     19,232       17,192  
Purchase of shares for treasury     (164,526 )     (113,455 )
Cash dividends paid to shareholders     (121,851 )     (118,118 )
Other financing activities     (763 )      
NET CASH USED BY FINANCING ACTIVITIES     (221,940 )     (246,141 )
             
Effect of exchange rate changes on Cash and cash equivalents     (2,088 )     1,708  
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (64,321 )     57,716  
Cash and cash equivalents at beginning of period     257,279       199,563  
Cash and cash equivalents at end of period   $ 192,958     $ 257,279  
             
Cash dividends paid per share   $ 2.04     $ 1.96  



Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)

                                 
       Americas      International       The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Three months ended December 31, 2021                                
Net sales   $ 480,263   $ 245,529   $ 118,459   $     $ 844,251  
Inter-segment sales     30,657     8,071     1,720     (40,448 )      
Total sales   $ 510,920   $ 253,600   $ 120,179   $ (40,448 )   $ 844,251  
                                 
Net income                           $ 74,427  
As a percent of total sales                             8.8 %
                                 
EBIT (1)   $ 40,258   $ 26,824   $ 12,320   $ (2,355 )   $ 77,047  
As a percent of total sales     7.9 %   10.6 %   10.3 %         9.1 %
Special items charges (gains) (3)     43,450     1,539     3,238           48,227  
Adjusted EBIT (2)   $ 83,708   $ 28,363   $ 15,558   $ (2,355 )   $ 125,274  
As a percent of total sales     16.4 %   11.2 %   12.9 %         14.8 %
                                 
Three months ended December 31, 2020                                
Net sales   $ 386,571   $ 214,782   $ 92,441   $     $ 693,794  
Inter-segment sales     27,734     4,827     1,658     (34,219 )      
Total sales   $ 414,305   $ 219,609   $ 94,099   $ (34,219 )   $ 693,794  
                                 
Net income                           $ 65,078  
As a percent of total sales                             9.4 %
                                 
EBIT (1)   $ 68,456   $ 4,949   $ 13,362   $ (553 )   $ 86,214  
As a percent of total sales     16.5 %   2.3 %   14.2 %         12.4 %
Special items charges (gains) (4)     748     10,301               11,049  
Adjusted EBIT (2)   $ 69,204   $ 15,250   $ 13,362   $ (553 )   $ 97,263  
As a percent of total sales     16.7 %   6.9 %   14.2 %         14.0 %

 

  (1)   EBIT is defined as Operating income plus Other income (expense).
  (2)   The primary profit measure used by management to assess segment performance is Adjusted EBIT.  EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT.
  (3)   Special items in 2021 reflect Rationalization and asset impairment charges of $1,550 primarily in International Welding, pension settlement charges of $43,439 and $2,965 in Americas Welding and The Harris Products Group, respectively, and amortization of the step up in value of acquired inventories of $273 in The Harris Products Group, related to acquisitions.
  (4)   Special items in 2020 reflect Rationalization and asset impairment net charges of ($849) and $10,301 in Americas Welding and International Welding, respectively, and pension settlement charges of $1,597 in Americas Welding.


 

Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)

                                 
       Americas      International      The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Year ended December 31, 2021                                
Net sales   $ 1,824,481   $ 948,125   $ 461,574   $     $ 3,234,180  
Inter-segment sales     140,650     26,331     8,096     (175,077 )      
Total sales   $ 1,965,131   $ 974,456   $ 469,670   $ (175,077 )   $ 3,234,180  
                                 
Net income                           $ 276,466  
As a percent of total sales                             8.5 %
                                 
EBIT (1)   $ 205,902   $ 90,974   $ 64,662   $ (14,326 )   $ 347,212  
As a percent of total sales     10.5 %   9.3 %   13.8 %         10.7 %
Special items charges (gains) (3)     123,114     15,234     3,785     1,923       144,056  
Adjusted EBIT (2)   $ 329,016   $ 106,208   $ 68,447   $ (12,403 )   $ 491,268  
As a percent of total sales     16.7 %   10.9 %   14.6 %         15.2 %
                                 
Year ended December 31, 2020                                
Net sales   $ 1,509,870   $ 786,809   $ 358,721   $     $ 2,655,400  
Inter-segment sales     109,378     18,494     7,034     (134,906 )      
Total sales   $ 1,619,248   $ 805,303   $ 365,755   $ (134,906 )   $ 2,655,400  
                                 
Net income                           $ 206,115  
As a percent of total sales                             7.8 %
                                 
EBIT (1)   $ 210,739   $ 25,575   $ 55,154   $ (5,455 )   $ 286,013  
As a percent of total sales     13.0 %   3.2 %   15.1 %         10.8 %
Special items charges (gains) (4)     34,989     19,404               54,393  
Adjusted EBIT (2)   $ 245,728   $ 44,979   $ 55,154   $ (5,455 )   $ 340,406  
As a percent of total sales     15.2 %   5.6 %   15.1 %         12.8 %

 

  (1)   EBIT is defined as Operating income plus Other income (expense).
  (2)   The primary profit measure used by management to assess segment performance is Adjusted EBIT.  EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT.
  (3)   Special items in 2021 reflect pension settlement charges of $123,091, $2,965 and $446 in Americas Welding, The Harris Products Group and International Welding, respectively, Rationalization and asset impairment charges of $9,827 primarily in International Welding, amortization of the step up in value of acquired inventories of $4,984 and $820 in International Welding and The Harris Products Group, respectively, and acquisition transaction costs of $1,923 in Corporate/Eliminations related to acquisitions.
  (4)   Special items in 2020 reflect Rationalization and asset impairment charges of $26,870 and $18,598 in Americas Welding and International Welding, respectively, amortization of the step up in value of acquired inventories of $806 in International Welding related to an acquisition, and pension settlement charges of $8,119 in Americas Welding.


 

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                     Foreign   Net Sales  
  2020   Volume   Acquisitions   Price   Exchange   2021  
Operating Segments                                    
Americas Welding $ 386,571   $ 35,759     $   $ 56,615   $ 1,318     $ 480,263  
International Welding   214,782     (1,764 )     17,517     29,920     (14,926 )     245,529  
The Harris Products Group   92,441     4,997       15,073     6,428     (480 )     118,459  
Consolidated $ 693,794   $ 38,992     $ 32,590   $ 92,963   $ (14,088 )   $ 844,251  
                                     
% Change                                    
Americas Welding         9.3   %       14.6 %   0.3   %   24.2 %
International Welding         (0.8 ) %   8.2 %   13.9 %   (6.9 ) %   14.3 %
The Harris Products Group         5.4   %   16.3 %   7.0 %   (0.5 ) %   28.1 %
Consolidated         5.6   %   4.7 %   13.4 %   (2.0 ) %   21.7 %

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

                                       
             Change in Net Sales due to:        
    Net Sales                     Foreign   Net Sales  
    2020   Volume   Acquisitions   Price   Exchange   2021  
Operating Segments                                      
Americas Welding   $ 1,509,870   $ 164,595   $   $ 136,967   $ 13,049     $ 1,824,481  
International Welding     786,809     62,033     24,473     70,457     4,353       948,125  
The Harris Products Group     358,721     33,772     24,953     44,459     (331 )     461,574  
Consolidated   $ 2,655,400   $ 260,400   $ 49,426   $ 251,883   $ 17,071     $ 3,234,180  
                                       
% Change                                      
Americas Welding           10.9 %       9.1 %   0.9   %   20.8 %
International Welding           7.9 %   3.1 %   9.0 %   0.6   %   20.5 %
The Harris Products Group           9.4 %   7.0 %   12.4 %   (0.1 ) %   28.7 %
Consolidated           9.8 %   1.9 %   9.5 %   0.6   %   21.8 %

 


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