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Lincoln Electric Reports Second Quarter 2014 Results

Jul 27 2014
Q2 EPS $0.96, Adjusted EPS increases 11% to $1.01

CLEVELAND, July 27, 2014 /PRNewswire/ -- 

Second Quarter 2014 Highlights

  • Reported sales were steady, up 2.1% excluding unfavorable foreign exchange translation
  • Operating income increased 7.7% to $112 million, or 15.4% of sales
  • Adjusted operating income increased 8.3% to $117 million and up 120 bps to 16.0% of sales
  • Returned $87 million to shareholders through share repurchases and dividends

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported second quarter 2014 net income of $77.3 million, or $0.96 per diluted share.  Net income was $72.6 million, or $0.87 per diluted share, in the comparable 2013 period.  Adjusted net income was $81.5 million, or $1.01 per diluted share, compared to adjusted net income of $75.7 million, or $0.91 per diluted share, in the comparable 2013 period.  Adjusted net income in the second quarter of 2014 includes earnings of $0.04 per diluted share from the Company's Venezuelan operations.

Sales were relatively steady at $728.5 million in the second quarter 2014 versus $727.4 million in the comparable 2013 period.  Operating income for the second quarter increased 7.7% to $112.3 million, or 15.4% of sales, from $104.3 million, or 14.3% of sales, in the comparable 2013 period.  Adjusted operating income increased 8.3% to $116.6 million or 16.0% of sales, compared with $107.7 million, or 14.8% of sales in 2013.  Operating income and Adjusted operating income include a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement. 

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased to report improving trends in our business from growth in our innovative solutions and benefits from acquisitions.  We achieved a 16.0% adjusted operating income margin in the quarter, reinforcing the solid execution of our '2020 Vision and Strategy' by improving mix, operating leverage and driving continuous improvement throughout our operations.  Cash returned to shareholders accelerated in the quarter and we now expect to achieve $250 million in share repurchases this year."

Net income for the six months ended June 30, 2014 was $133.8 million, or $1.65 per diluted share, compared with net income of $139.4 million, or $1.67 per diluted share, in 2013.  Adjusted net income was $155.6 million, or $1.92 per diluted share, compared to adjusted net income of $152.9 million, or $1.83 per diluted share, in 2013.  Adjusted net income for the six months ended June 30, 2014 includes earnings of $0.18 per diluted share from the Company's Venezuelan operations. 

Sales decreased 2.2% to $1.41 billion in the six months ended June 30, 2014 versus $1.45 billion in the comparable 2013 period.  This decrease reflects lower volumes and unfavorable foreign exchange translation, partially offset by acquisitions.  Operating income for the six months ended June 30, 2014 remained relatively flat at $192.7 million, or 13.6% of sales, compared to $192.9 million, or 13.3% of sales, in the comparable 2013 period.  Results in 2014 include charges of $21.2 million from Venezuelan foreign exchange remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter.  Adjusted operating income increased 3.7% to $214.7 million or 15.2% of sales, compared with $207.0 million, or 14.3% of sales in 2013.  Operating income and Adjusted operating income include a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.

The Company's Board of Directors declared a quarterly cash dividend of $0.23 per share, which was paid on July 15, 2014 to holders of record on June 30, 2014.  During the quarter, the Company returned $68.3 million to shareholders through the repurchase of 1,009,353 of the Company's common shares. 

Webcast Information

A conference call to discuss second quarter 2014 financial results will be webcast live on Monday, July 28, 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 68746760.  Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the second quarter 2014 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 June 30,

 

Fav (Unfav) to Prior Year

 

2014

 

% of Sales

 

2013

 

% of Sales

 

$

 

%

Net sales

$

728,531

   

100.0

%

 

$

727,432

   

100.0

%

 

$

1,099

   

0.2

%

Cost of goods sold

478,264

   

65.6

%

 

487,094

   

67.0

%

 

8,830

   

1.8

%

Gross profit

250,267

   

34.4

%

 

240,338

   

33.0

%

 

9,929

   

4.1

%

Selling, general & administrative expenses

137,156

   

18.8

%

 

135,215

   

18.6

%

 

(1,941)

   

(1.4)

%

Rationalization and asset impairment charges

836

   

0.1

%

 

851

   

0.1

%

 

15

   

1.8

%

Operating income

112,275

   

15.4

%

 

104,272

   

14.3

%

 

8,003

   

7.7

%

Interest income

924

   

0.1

%

 

890

   

0.1

%

 

34

   

3.8

%

Equity earnings in affiliates

1,575

   

0.2

%

 

1,258

   

0.2

%

 

317

   

25.2

%

Other income

1,078

   

0.1

%

 

913

   

0.1

%

 

165

   

18.1

%

Interest expense

(986)

   

(0.1)

%

 

(799)

   

(0.1)

%

 

(187)

   

(23.4)

%

Income before income taxes

114,866

   

15.8

%

 

106,534

   

14.6

%

 

8,332

   

7.8

%

Income taxes

37,577

   

5.2

%

 

34,007

   

4.7

%

 

(3,570)

   

(10.5)

%

Effective tax rate

32.7

%

       

31.9

%

       

(0.8)

 

%

   

Net income including non-controlling interests

77,289

   

10.6

%

 

72,527

   

10.0

%

 

4,762

   

6.6

%

Non-controlling interests in subsidiaries' loss

(43)

   

   

(79)

   

   

36

   

45.6

%

Net income

$

77,332

   

10.6

%

 

$

72,606

   

10.0

%

 

$

4,726

   

6.5

%

                                   

Basic earnings per share

$

0.97

         

$

0.88

         

$

0.09

   

10.2

%

Diluted earnings per share

$

0.96

         

$

0.87

         

$

0.09

   

10.3

%

Weighted average shares (basic)

79,873

         

82,419

                   

Weighted average shares (diluted)

80,773

         

83,411

                   
                                   
 

Six months ended June 30,

 

Fav (Unfav) to Prior Year

 

2014

 

% of Sales

 

2013

 

% of Sales

 

$

 

%

Net sales

$

1,413,593

   

100.0

%

 

$

1,446,005

   

100.0

%

 

$

(32,412)

   

(2.2)

%

Cost of goods sold

936,990

   

66.3

%

 

979,095

   

67.7

%

 

42,105

   

4.3

%

Gross profit

476,603

   

33.7

%

 

466,910

   

32.3

%

 

9,693

   

2.1

%

Selling, general & administrative expenses

283,071

   

20.0

%

 

272,106

   

18.8

%

 

(10,965)

   

(4.0)

%

Rationalization and asset impairment charges

819

   

0.1

%

 

1,902

   

0.1

%

 

1,083

   

56.9

%

Operating income

192,713

   

13.6

%

 

192,902

   

13.3

%

 

(189)

   

(0.1)

%

Interest income

1,838

   

0.1

%

 

1,916

   

0.1

%

 

(78)

   

(4.1)

%

Equity earnings in affiliates

3,136

   

0.2

%

 

2,517

   

0.2

%

 

619

   

24.6

%

Other income

2,161

   

0.2

%

 

1,627

   

0.1

%

 

534

   

32.8

%

Interest expense

(2,556)

   

(0.2)

%

 

(1,749)

   

(0.1)

%

 

(807)

   

(46.1)

%

Income before income taxes

197,292

   

14.0

%

 

197,213

   

13.6

%

 

79

   

 

Income taxes

63,579

   

4.5

%

 

57,843

   

4.0

%

 

(5,736)

   

(9.9)

%

Effective tax rate

32.2

%

       

29.3

%

       

(2.9)

 

%

   

Net income including non-controlling interests

133,713

   

9.5

%

 

139,370

   

9.6

%

 

(5,657)

   

(4.1)

%

Non-controlling interests in subsidiaries' loss

(72)

   

   

(42)

   

   

(30)

   

(71.4)

%

Net income

$

133,785

   

9.5

%

 

$

139,412

   

9.6

%

 

$

(5,627)

   

(4.0)

%

                                   

Basic earnings per share

$

1.67

         

$

1.69

         

$

(0.02)

   

(1.2)

%

Diluted earnings per share

$

1.65

         

$

1.67

         

$

(0.02)

   

(1.2)

%

Weighted average shares (basic)

80,260

         

82,569

                   

Weighted average shares (diluted)

81,194

         

83,606

                   

 

 

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

Non-GAAP Financial Measures

 
 

Three months ended June 30,

 

Six months ended June 30,

 

2014

 

2013

 

2014

 

2013

Operating income as reported

$

112,275

 

$

104,272

 

$

192,713

 

$

192,902

Special items (pre-tax):

             

Rationalization and asset impairment charges (1)

836

 

851

 

819

 

1,902

Venezuela foreign exchange losses (2)

3,468

 

2,538

 

21,133

 

12,198

Adjusted operating income (3)

$

116,579

 

$

107,661

 

$

214,665

 

$

207,002

               

Net income as reported

$

77,332

 

$

72,606

 

$

133,785

 

$

139,412

Special items (after-tax):

             

Rationalization and asset impairment charges (1)

698

 

579

 

691

 

1,252

Venezuela foreign exchange losses (2)

3,468

 

2,538

 

21,133

 

12,198

Adjusted net income (3)

$

81,498

 

$

75,723

 

$

155,609

 

$

152,862

               

Diluted earnings per share as reported

$

0.96

 

$

0.87

 

$

1.65

 

$

1.67

Special items

0.05

 

0.04

 

0.27

 

0.16

Adjusted diluted earnings per share (3)

$

1.01

 

$

0.91

 

$

1.92

 

$

1.83

               

Weighted average shares (diluted)

80,773

 

83,411

 

81,194

 

83,606

   

(1)

The three and six months ended June 30, 2014 and 2013 include net charges associated with 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)

The three and six months ended June 30, 2014 represents the impact of the Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism in the first quarter.  The three and six months ended June 30, 2013 represents the impact of the devaluation of the Venezuelan currency.

(3)

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

June 30, 2014

 

December 31, 2013

Cash and cash equivalents

$

204,285

   

$

299,825

 

Total current assets

1,105,739

   

1,130,775

 

Property, plant and equipment, net

481,861

   

484,005

 

Total assets

2,144,839

   

2,151,867

 

Total current liabilities

464,489

   

456,917

 

Short-term debt (1)

6,908

   

15,296

 

Long-term debt

1,159

   

3,791

 

Total equity

1,521,473

   

1,530,688

 
           

Net Operating Working Capital

June 30, 2014

 

December 31, 2013

Accounts receivable

$

407,223

   

$

367,134

 

Inventory

368,027

   

349,963

 

Trade accounts payable

196,929

   

212,799

 

Net operating working capital

$

578,321

   

$

504,298

 
           

Net operating working capital to net sales (2)

19.8

%

 

17.6

%

           

Invested Capital

June 30, 2014

 

December 31, 2013

Short-term debt (1)

$

6,908

   

$

15,296

 

Long-term debt

1,159

   

3,791

 

Total debt

8,067

   

19,087

 

Total equity

1,521,473

   

1,530,688

 

Invested capital

$

1,529,540

   

$

1,549,775

 
           

Total debt / invested capital

0.5

%

 

1.2

%

Return on invested capital (3)

18.9

%

 

18.9

%

   

(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 June 30,

 

2014

 

2013

OPERATING ACTIVITIES:

     

Net income

$

77,332

 

$

72,606

Non-controlling interests in subsidiaries' loss

(43)

 

(79)

Net income including non-controlling interests

77,289

 

72,527

Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:

     

Rationalization and asset impairment charges

894

 

240

Depreciation and amortization

17,969

 

17,158

Equity earnings in affiliates, net

(701)

 

(446)

Pension expense

2,676

 

7,320

Pension contributions and payments

(2,083)

 

(26,030)

Other non-cash items, net

(3,325)

 

9,991

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

     

Decrease in accounts receivable

544

 

23,218

(Increase) decrease in inventories

(2,298)

 

4,026

Decrease in trade accounts payable

(3,341)

 

(20,108)

Net change in other current assets and liabilities

21,833

 

21,439

Net change in other long-term assets and liabilities

(4,483)

 

(2,136)

NET CASH PROVIDED BY OPERATING ACTIVITIES

104,974

 

107,199

       

INVESTING ACTIVITIES:

     

Capital expenditures

(25,441)

 

(15,910)

Acquisition of businesses, net of cash acquired

 

(4,127)

Proceeds from sale of property, plant and equipment

4,443

 

487

Other investing activities

205

 

(4,217)

NET CASH USED BY INVESTING ACTIVITIES

(20,793)

 

(23,767)

       

FINANCING ACTIVITIES:

     

Net change in borrowings

(2,087)

 

(1,263)

Proceeds from exercise of stock options

1,054

 

3,546

Excess tax benefits from stock-based compensation

826

 

1,476

Purchase of shares for treasury

(68,312)

 

(56,897)

Cash dividends paid to shareholders

(18,496)

 

(16,580)

Transactions with non-controlling interests

 

(2,809)

NET CASH USED BY FINANCING ACTIVITIES

(87,015)

 

(72,527)

       

Effect of exchange rate changes on Cash and cash equivalents

1,732

 

(2,971)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(1,102)

 

7,934

Cash and cash equivalents at beginning of period

205,387

 

248,455

Cash and cash equivalents at end of period

$

204,285

 

$

256,389

       

Cash dividends paid per share

$

0.23

 

$

0.20

 

 

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

 

Condensed Consolidated Statements of Cash Flows 

Six months ended June 30,

 

2014

 

2013

OPERATING ACTIVITIES:

     

Net income

$

133,785

 

$

139,412

Non-controlling interests in subsidiaries' loss

(72)

 

(42)

Net income including non-controlling interests

133,713

 

139,370

Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:

     

Rationalization and asset impairment charges

859

 

354

Depreciation and amortization

35,900

 

34,555

Equity earnings in affiliates, net

(1,497)

 

(882)

Pension expense

5,476

 

14,935

Pension contributions and payments

(24,164)

 

(81,351)

Other non-cash items, net

20,659

 

24,336

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

     

Increase in accounts receivable

(43,341)

 

(43,367)

Increase in inventories

(17,455)

 

(12,308)

Decrease in trade accounts payable

(15,449)

 

(11,840)

Net change in other current assets and liabilities

27,380

 

25,621

Net change in other long-term assets and liabilities

(3,476)

 

(2,372)

NET CASH PROVIDED BY OPERATING ACTIVITIES

118,605

 

87,051

       

INVESTING ACTIVITIES:

     

Capital expenditures

(39,947)

 

(31,048)

Acquisition of businesses, net of cash acquired

(892)

 

(4,676)

Proceeds from sale of property, plant and equipment

5,509

 

592

Other investing activities

778

 

(4,217)

NET CASH USED BY INVESTING ACTIVITIES

(34,552)

 

(39,349)

       

FINANCING ACTIVITIES:

     

Net change in borrowings

(10,143)

 

(2,755)

Proceeds from exercise of stock options

4,010

 

13,204

Excess tax benefits from stock-based compensation

2,478

 

5,465

Purchase of shares for treasury

(119,333)

 

(69,677)

Cash dividends paid to shareholders

(37,119)

 

(16,580)

Transactions with non-controlling interests

(2,330)

 

(2,809)

NET CASH USED BY FINANCING ACTIVITIES

(162,437)

 

(73,152)

       

Effect of exchange rate changes on Cash and cash equivalents

(17,156)

 

(4,625)

DECREASE IN CASH AND CASH EQUIVALENTS

(95,540)

 

(30,075)

Cash and cash equivalents at beginning of period

299,825

 

286,464

Cash and cash equivalents at end of period

$

204,285

 

$

256,389

       

Cash dividends paid per share

$

0.46

 

$

0.20

 

 

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 June 30, 2014

                                         

Net sales

$

429,490

   

$

115,574

   

$

66,997

   

$

39,051

   

$

77,419

         

$

728,531

 

Inter-segment sales

33,360

   

5,494

   

3,600

   

35

   

2,262

   

(44,751)

   

 

Total

$

462,850

   

$

121,068

   

$

70,597

   

$

39,086

   

$

79,681

   

$

(44,751)

   

$

728,531

 
                                         

EBIT (1)

$

91,216

   

$

13,934

   

$

473

   

$

1,527

   

$

7,178

   

$

600

   

$

114,928

 

As a percent of total sales

19.7

%

 

11.5

%

 

0.7

%

 

3.9

%

 

9.0

%

       

15.8

%

Special items (gain) charge (2)

$

(21)

   

$

965

   

$

(108)

   

$

3,468

   

$

   

$

   

$

4,304

 

EBIT, as adjusted (4)

$

91,195

   

$

14,899

   

$

365

   

$

4,995

   

$

7,178

   

$

600

   

$

119,232

 

As a percent of total sales

19.7

%

 

12.3

%

 

0.5

%

 

12.8

%

 

9.0

%

       

16.4

%

Three months ended June 30, 2013

                                         

Net sales

$

419,069

   

$

108,661

   

$

69,239

   

$

44,503

   

$

85,960

   

$

   

$

727,432

 

Inter-segment sales

35,529

   

4,330

   

4,374

   

51

   

2,674

   

(46,958)

   

 

Total

$

454,598

   

$

112,991

   

$

73,613

   

$

44,554

   

$

88,634

   

$

(46,958)

   

$

727,432

 
                                         

EBIT (1)

$

82,511

   

$

9,457

   

$

143

   

$

8,527

   

$

7,343

   

$

(1,538)

   

$

106,443

 

As a percent of total sales

18.2

%

 

8.4

%

 

0.2

%

 

19.1

%

 

8.3

%

       

14.6

%

Special items (gain) charge (3)

$

266

   

$

75

   

$

510

   

$

2,538

   

$

   

$

   

$

3,389

 

EBIT, as adjusted (4)

$

82,777

   

$

9,532

   

$

653

   

$

11,065

   

$

7,343

   

$

(1,538)

   

$

109,832

 

As a percent of total sales

18.2

%

 

8.4

%

 

0.9

%

 

24.8

%

 

8.3

%

       

15.1

%

Six months ended June 30, 2014

                                         

Net sales

$

831,396

   

$

220,980

   

$

128,283

   

$

83,044

   

$

149,890

   

$

   

$

1,413,593

 

Inter-segment sales

66,303

   

11,354

   

8,049

   

64

   

4,380

   

(90,150)

   

 

Total

$

897,699

   

$

232,334

   

$

136,332

   

$

83,108

   

$

154,270

   

$

(90,150)

   

$

1,413,593

 
                                         

EBIT (1)

$

162,627

   

$

23,187

   

$

(158)

   

$

(4,373)

   

$

13,236

   

$

3,491

   

$

198,010

 

As a percent of total sales

18.1

%

 

10.0

%

 

(0.1)

%

 

(5.3)

%

 

8.6

%

       

14.0

%

Special items (gain) charge (2)

$

(68)

   

$

1,004

   

$

(117)

   

$

21,133

   

$

   

$

   

$

21,952

 

EBIT, as adjusted (4)

$

162,559

   

$

24,191

   

$

(275)

   

$

16,760

   

$

13,236

   

$

3,491

   

$

219,962

 

As a percent of total sales

18.1

%

 

10.4

%

 

(0.2)

%

 

20.2

%

 

8.6

%

       

15.6

%

Six months ended June 30, 2013

                                         

Net sales

$

838,623

   

$

219,152

   

$

139,278

   

$

80,877

   

$

168,075

   

$

   

$

1,446,005

 

Inter-segment sales

64,514

   

8,609

   

8,758

   

71

   

4,898

   

(86,850)

   

 

Total

$

903,137

   

$

227,761

   

$

148,036

   

$

80,948

   

$

172,973

   

$

(86,850)

   

$

1,446,005

 
                                         

EBIT (1)

$

158,311

   

$

20,164

   

$

2,239

   

$

3,979

   

$

14,494

   

$

(2,141)

   

$

197,046

 

As a percent of total sales

17.5

%

 

8.9

%

 

1.5

%

 

4.9

%

 

8.4

%

       

13.6

%

Special items (gain) charge (3)

$

1,126

   

$

69

   

$

707

   

$

12,198

   

$

   

$

   

$

14,100

 

EBIT, as adjusted (4)

$

159,437

   

$

20,233

   

$

2,946

   

$

16,177

   

$

14,494

   

$

(2,141)

   

$

211,146

 

As a percent of total sales

17.7

%

 

8.9

%

 

2.0

%

 

20.0

%

 

8.4

%

       

14.6

%

                                         

(1)

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

(2)

Special items in the three and six months ended June 30, 2014 include net charges primarily related to severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets at rationalized operations and the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. 

(3)

Special items in the three and six months ended June 30, 2013 include net rationalization and asset impairment charges and the impact of the devaluation of the Venezuelan currency.

(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 June 30th Change in Net Sales by Segment

               
       

Change in Net Sales due to:

     
 

Net Sales

2013

   

Volume

 

Acquisitions

 

Price

 

Foreign

Exchange

 

Net Sales

2014

 

Operating Segments

                                 

North America Welding

$

419,069

   

$

(794)

   

$

8,462

   

$

4,435

   

$

(1,682)

   

$

429,490

 

Europe Welding

108,661

   

3,410

   

   

(212)

   

3,715

   

115,574

 

Asia Pacific Welding

69,239

   

(264)

   

   

370

   

(2,348)

   

66,997

 

South America Welding

44,503

   

(8,770)

   

   

16,709

   

(13,391)

   

39,051

 

The Harris Products Group

85,960

   

(3,984)

   

   

(4,571)

   

14

   

77,419

 

Consolidated

$

727,432

   

$

(10,402)

   

$

8,462

   

$

16,731

   

$

(13,692)

   

$

728,531

 

% Change

                                 

North America Welding

     

(0.2)

%

 

2.0

%

 

1.1

%

 

(0.4)

%

 

2.5

%

Europe Welding

     

3.1

%

 

   

(0.2)

%

 

3.4

%

 

6.4

%

Asia Pacific Welding

     

(0.4)

%

 

   

0.5

%

 

(3.4)

%

 

(3.2)

%

South America Welding

     

(19.7)

%

 

   

37.5

%

 

(30.1)

%

 

(12.3)

%

The Harris Products Group

     

(4.6)

%

 

   

(5.3)

%

 

   

(9.9)

%

Consolidated

     

(1.4)

%

 

1.2

%

 

2.3

%

 

(1.9)

%

 

0.2

%

                                   
                                   

Six Months Ended June 30th Change in Net Sales by Segment

               
       

Change in Net Sales due to:

     
 

Net Sales

2013

   

Volume

 

Acquisitions

 

Price

 

Foreign

Exchange

 

Net Sales

2014

 

Operating Segments

                                 

North America Welding

$

838,623

   

$

(24,204)

   

$

16,331

   

$

5,675

   

$

(5,029)

   

$

831,396

 

Europe Welding

219,152

   

(2,077)

   

   

(1,762)

   

5,667

   

220,980

 

Asia Pacific Welding

139,278

   

(5,650)

   

   

45

   

(5,390)

   

128,283

 

South America Welding

80,877

   

(10,796)

   

   

30,410

   

(17,447)

   

83,044

 

The Harris Products Group

168,075

   

(3,584)

   

   

(13,775)

   

(826)

   

149,890

 

Consolidated

$

1,446,005

   

$

(46,311)

   

$

16,331

   

$

20,593

   

$

(23,025)

   

$

1,413,593

 

% Change

                                 

North America Welding

     

(2.9)

%

 

1.9

%

 

0.7

%

 

(0.6)

v

 

(0.9)

%

Europe Welding

     

(0.9)

%

 

   

(0.8)

%

 

2.6

%

 

0.8

%

Asia Pacific Welding

     

(4.1)

%

 

   

   

(3.9)

%

 

(7.9)

%

South America Welding

     

(13.3)

%

 

   

37.6

%

 

(21.6)

%

 

2.7

%

The Harris Products Group

     

(2.1)

%

 

   

(8.2)

%

 

(0.5)

%

 

(10.8)

%

Consolidated

     

(3.2)

%

 

1.1

%

 

1.4

%

 

(1.6)

%

 

(2.2)

%

 

SOURCE Lincoln Electric Holdings, Inc.

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