Lincoln Electric Reports Second Quarter 2017 Results Jul 25 2017 Lincoln Electric Reports Second Quarter 2017 Results 913.8 KB Second Quarter 2017 Highlights - Organic sales increase 5.8% - Operating income margin of 14.0%, 14.7% on an adjusted basis - EPS of $0.92, Adjusted EPS of $0.97 CLEVELAND, July 25, 2017 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq:LECO) today reported second quarter 2017 net income of $61.4 million, or diluted earnings per share (EPS) of $0.92, which includes acquisition transaction and integration costs of $4.5 million, $3.5 million after-tax, or $0.05 EPS, related to the proposed acquisition of Air Liquide Welding. The second quarter 2017 also includes a $2.9 million, or $0.04 EPS, tax benefit from stock option exercises that are now recognized through income tax expense following the adoption of a new accounting standard in the first quarter 2017. Second quarter 2016 net income was $31.3 million, or $0.45 EPS, and on an adjusted basis, $57.4 million, or $0.83 EPS. Second quarter 2017 sales increased 5.8% to $626.9 million on 3.2% higher volumes and a 2.6% increase in price. Excluding Venezuela from prior year results due to the deconsolidation of the operation, sales increased 6.9%, from 4.2% higher volumes and a 2.7% increase in price. Operating income for second quarter 2017 was $87.6 million, or 14.0% of sales. This compares with operating income of $48.1 million, or 8.1% of sales, in the comparable 2016 period. On an adjusted basis, operating income was $92.1 million, or 14.7% of sales, as compared with $82.4 million, or 13.9% of sales, in the prior year. On April 27, 2017, the Company entered into a definitive agreement with Air Liquide to acquire its Air Liquide Welding subsidiary. The definitive agreement reflects an approximate $131 million purchase price for the Air Liquide Welding business, including the assumption of net debt and working capital adjustments. The proposed acquisition is expected to close on July 31, 2017. "We achieved good momentum in the second quarter with sales growth across all three segments and among most end markets,” stated Christopher L. Mapes, chairman, president and chief executive officer. “Financial performance remained solid as operational initiatives and volume improvements helped mitigate rising raw material costs and operating expenses. Given sustained improvement in year-over-year demand, we expect to continue to achieve modest sales and margin growth in 2017. We are also looking forward to completing the Air Liquide Welding acquisition, which will further advance our '2020 Vision and Strategy'.” Six Months 2017 Summary Net income for the six months ended June 30, 2017 was $117.2 million, or EPS of $1.76, which includes acquisition transaction and integration costs of $8.1 million, $6.2 million after-tax, or $0.09 EPS, related to the proposed acquisition of Air Liquide Welding. The six months ended June 30, 2017 also includes a $4.1 million, or $0.06 EPS, tax benefit from stock option exercises that are now recognized through income tax expense following the adoption of a new accounting standard in the first quarter 2017. For the six months ended June 30, 2016, net income was $85.0 million, or $1.22 EPS, and on an adjusted basis, $111.0 million, or $1.60 EPS. Sales increased 5.7% to $1.2 billion for the six months ended June 30, 2017 on 3.1% higher volumes and a 2.4% increase in price. Excluding Venezuela from prior year results due to the deconsolidation of the operation, sales increased 6.7%, from 4.1% higher volumes and a 2.4% increase in price. Operating income for six months ended June 30, 2017 was $169.1 million, or 14.0% of sales. This compares with operating income of $123.4 million, or 10.8% of sales, in the comparable 2016 period. On an adjusted basis, operating income was $177.2 million, or 14.7% of sales, as compared with $157.7 million, or 13.8% of sales, in the prior year. Webcast Information A conference call to discuss second quarter 2017 financial results will be webcast live today, July 25, 2017, at 10:00 a.m., Eastern Time. This webcast is accessible at http://ir.lincolnelectric.com. Listeners should go to the web site prior to the call to register, download and install any necessary audio software. A replay of the webcast will be available on the Company's web site. Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 51410082. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call. Financial results for the second quarter 2017 can also be obtained at http://ir.lincolnelectric.com. About Lincoln Electric Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 47 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at http://www.lincolnelectric.com. Non-GAAP Information Adjusted operating income, Adjusted net income, Adjusted diluted earnings per share and Return on invested capital are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently. Forward-Looking Statements The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic and market conditions; the effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully complete the Air Liquide Welding business acquisition; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Consolidated Statements of Income Three Months Ended June 30, Fav (Unfav) to Prior Year 2017 % of Sales 2016 % of Sales $ % Net sales $ 626,858 100.0 % $ 592,418 100.0 % $ 34,440 5.8 % Cost of goods sold 409,370 65.3 % 389,491 65.7 % (19,879 ) (5.1 %) Gross profit 217,488 34.7 % 202,927 34.3 % 14,561 7.2 % Selling, general & administrative expenses 129,846 20.7 % 120,497 20.3 % (9,349 ) (7.8 %) Loss on deconsolidation of Venezuelan subsidiary — — 34,348 5.8 % 34,348 100.0 % Operating income 87,642 14.0 % 48,082 8.1 % 39,560 82.3 % Interest income 1,245 0.2 % 435 0.1 % 810 186.2 % Equity earnings in affiliates 440 0.1 % 839 0.1 % (399 ) (47.6 %) Other income 936 0.1 % 588 0.1 % 348 59.2 % Interest expense (6,297 ) 1.0 % (4,186 ) 0.7 % (2,111 ) (50.4 %) Income before income taxes 83,966 13.4 % 45,758 7.7 % 38,208 83.5 % Income taxes 22,635 3.6 % 14,449 2.4 % (8,186 ) (56.7 %) Effective tax rate 27.0 % 31.6 % 4.6 % Net income including non-controlling interests 61,331 9.8 % 31,309 5.3 % 30,022 95.9 % Non-controlling interests in subsidiaries’ loss (21 ) — (8 ) — (13 ) (162.5 %) Net income $ 61,352 9.8 % $ 31,317 5.3 % $ 30,035 95.9 % Basic earnings per share $ 0.93 $ 0.46 $ 0.47 102.2 % Diluted earnings per share $ 0.92 $ 0.45 $ 0.47 104.4 % Weighted average shares (basic) 65,811 68,181 Weighted average shares (diluted) 66,743 68,890 Six Months Ended June 30, Fav (Unfav) toPrior Year 2017 % of Sales 2016 % of Sales $ % Net sales $ 1,207,755 100.0 % $ 1,143,140 100.0 % $ 64,615 5.7 % Cost of goods sold 786,411 65.1 % 751,111 65.7 % (35,300 ) (4.7 %) Gross profit 421,344 34.9 % 392,029 34.3 % 29,315 7.5 % Selling, general & administrative expenses 252,216 20.9 % 234,307 20.5 % (17,909 ) (7.6 %) Loss on deconsolidation of Venezuelan subsidiary — — 34,348 3.0 % 34,348 100.0 % Operating income 169,128 14.0 % 123,374 10.8 % 45,754 37.1 % Interest income 2,022 0.2 % 865 0.1 % 1,157 133.8 % Equity earnings in affiliates 1,235 0.1 % 1,465 0.1 % (230 ) (15.7 %) Other income 1,892 0.2 % 1,249 0.1 % 643 51.5 % Interest expense (12,411 ) 1.0 % (8,013 ) 0.7 % (4,398 ) (54.9 %) Income before income taxes 161,866 13.4 % 118,940 10.4 % 42,926 36.1 % Income taxes 44,687 3.7 % 34,007 3.0 % (10,680 ) (31.4 %) Effective tax rate 27.6 % 28.6 % 1.0 % Net income including non-controlling interests 117,179 9.7 % 84,933 7.4 % 32,246 38.0 % Non-controlling interests in subsidiaries’ loss (17 ) — (22 ) — 5 22.7 % Net income $ 117,196 9.7 % $ 84,955 7.4 % $ 32,241 38.0 % Basic earnings per share $ 1.78 $ 1.23 $ 0.55 44.7 % Diluted earnings per share $ 1.76 $ 1.22 $ 0.54 44.3 % Weighted average shares (basic) 65,750 68,883 Weighted average shares (diluted) 66,666 69,569 Lincoln Electric Holdings, Inc. Financial Highlights (In thousands) (Unaudited) Balance Sheet Highlights Selected Consolidated Balance Sheet Data June 30, 2017 December 31, 2016 Cash and cash equivalents $ 395,735 $ 379,179 Total current assets 1,207,832 1,043,713 Property, plant and equipment, net 384,947 372,377 Total assets 2,121,673 1,943,437 Total current liabilities 415,643 388,107 Short-term debt (1) 1,953 1,889 Long-term debt, less current portion 704,732 703,704 Total equity 851,776 712,206 Operating Working Capital June 30, 2017 December 31, 2016 Accounts receivable, net $ 323,185 $ 273,993 Inventories 289,635 255,406 Trade accounts payable 194,758 176,757 Operating working capital $ 418,062 $ 352,642 Average operating working capital to Net sales (2) 16.7 % 15.6 % Invested Capital June 30, 2017 December 31, 2016 Short-term debt (1) $ 1,953 $ 1,889 Long-term debt, less current portion 704,732 703,704 Total debt 706,685 705,593 Total equity 851,776 712,206 Invested capital $ 1,558,461 $ 1,417,799 Total debt / invested capital 45.3 % 49.8 % (1) Includes current portion of long-term debt. (2) Average operating working capital to Net sales is defined as operating working capital as of period end divided by annualized rolling three months of Net sales. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Non-GAAP Financial Measures Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Operating income as reported $ 87,642 $ 48,082 $ 169,128 $ 123,374 Special items (pre-tax): Loss on deconsolidation of Venezuelan subsidiary (2) — 34,348 — 34,348 Acquisition transaction and integration costs (3) 4,498 — 8,113 — Adjusted operating income (1) $ 92,140 $ 82,430 $ 177,241 $ 157,722 As a percent of total sales 14.7 % 13.9 % 14.7 % 13.8 % Net income as reported $ 61,352 $ 31,317 $ 117,196 $ 84,955 Special items (after-tax): Loss on deconsolidation of Venezuelan subsidiary (2) — 33,251 — 33,251 Income tax valuation reversals (4) — (7,196 ) — (7,196 ) Acquisition transaction and integration costs (3) 3,494 — 6,228 — Adjusted net income (1) $ 64,846 $ 57,372 $ 123,424 $ 111,010 Diluted earnings per share as reported $ 0.92 $ 0.45 $ 1.76 $ 1.22 Special items 0.05 0.38 0.09 0.38 Adjusted diluted earnings per share (1) $ 0.97 $ 0.83 $ 1.85 $ 1.60 Weighted average shares (diluted) 66,743 68,890 66,666 69,569 (1) Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently. (2) Related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016. (3) Related to proposed acquisition of Air Liquide Welding. (4) Related to the reversal of an income tax valuation allowance as a result of a legal entity change. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Non-GAAP Financial Measures Twelve Months Ended June 30, Return on Invested Capital 2017 2016 Net income as reported $ 230,640 $ 73,181 Rationalization and asset impairment charges, net of tax of $1,437 — 17,281 Loss on deconsolidation of Venezuelan subsidiary, net of tax of $1,097 — 33,251 Income tax valuation reversals — (7,196 ) Pension settlement charges, net of tax of $55,428 — 87,310 Venezuela currency devaluation — 27,214 Acquisition transaction and integration costs, net of tax of $1,885 (3) 6,228 — Adjusted net income (1) $ 236,868 $ 231,041 Plus: Interest expense, net of tax of $8,988 and $9,038 in 2017 and 2016, respectively 14,489 14,568 Less: Interest income, net of tax of $1,244 and $861 in 2017 and 2016, respectively 2,005 1,387 Adjusted net income before tax effected interest $ 249,352 $ 244,222 Invested Capital June 30, 2017 June 30, 2016 Short-term debt $ 1,953 $ 159,908 Long-term debt, less current portion 704,732 360,931 Total debt 706,685 520,839 Total equity 851,776 792,414 Invested capital $ 1,558,461 $ 1,313,253 Return on invested capital (1)(2) 16.0 % 18.6 % (1) Adjusted net income and Return on invested capital are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently. (2) Return on invested capital is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by invested capital. (3) Related to proposed acquisition of Air Liquide Welding. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Condensed Consolidated Statements of Cash Flows Three Months Ended June 30, 2017 2016 OPERATING ACTIVITIES: Net income $ 61,352 $ 31,317 Non-controlling interests in subsidiaries’ loss (21 ) (8 ) Net income including non-controlling interests 61,331 31,309 Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: Loss on deconsolidation of Venezuelan subsidiary — 34,348 Depreciation and amortization 15,840 16,607 Equity loss (earnings) in affiliates, net 195 (56 ) Pension (income) expense (1,334 ) 5,112 Pension contributions and payments (618 ) (712 ) Other non-cash items, net 9,091 (3,316 ) Changes in operating assets and liabilities, net of effects from acquisitions: Increase in accounts receivable (15,811 ) (5,801 ) Increase in inventories (3,811 ) (4,712 ) Increase in trade accounts payable 5,455 17,571 Net change in other current assets and liabilities 3,536 12,083 Net change in other long-term assets and liabilities 1,573 (272 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 75,447 102,161 INVESTING ACTIVITIES: Capital expenditures (16,094 ) (15,894 ) Acquisition of businesses, net of cash acquired — (71,567 ) Proceeds from sale of property, plant and equipment 899 221 Purchase of marketable securities (35,009 ) — Proceeds from marketable securities 1,190 — Other investing activities — (283 ) NET CASH USED BY INVESTING ACTIVITIES (49,014 ) (87,523 ) FINANCING ACTIVITIES: Net change in borrowings (321 ) 137,514 Proceeds from exercise of stock options 7,754 3,700 Purchase of shares for treasury (7,345 ) (100,445 ) Cash dividends paid to shareholders (23,030 ) (22,022 ) Other financing activities (15,182 ) (14,438 ) NET CASH (USED BY) PROVIDED BY FINANCING ACTIVITIES (38,124 ) 4,309 Effect of exchange rate changes on Cash and cash equivalents 5,986 (2,924 ) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,705 ) 16,023 Cash and cash equivalents at beginning of period 401,440 220,996 Cash and cash equivalents at end of period $ 395,735 $ 237,019 Cash dividends paid per share $ 0.35 $ 0.32 Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2017 2016 OPERATING ACTIVITIES: Net income $ 117,196 $ 84,955 Non-controlling interests in subsidiaries’ loss (17 ) (22 ) Net income including non-controlling interests 117,179 84,933 Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: Loss on deconsolidation of Venezuelan subsidiary — 34,348 Depreciation and amortization 32,006 32,232 Equity earnings in affiliates, net (75 ) (58 ) Pension (income) expense (2,679 ) 9,256 Pension contributions and payments (1,168 ) (21,577 ) Other non-cash items, net 15,632 (5,395 ) Changes in operating assets and liabilities, net of effects from acquisitions: Increase in accounts receivable (40,006 ) (22,393 ) Increase in inventories (24,757 ) (15,492 ) Increase in trade accounts payable 12,619 22,228 Net change in other current assets and liabilities 38,869 9,529 Net change in other long-term assets and liabilities 4,067 (732 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 151,687 126,879 INVESTING ACTIVITIES: Capital expenditures (28,131 ) (24,779 ) Acquisition of businesses, net of cash acquired — (71,567 ) Proceeds from sale of property, plant and equipment 1,102 679 Purchase of marketable securities (69,934 ) — Proceeds from marketable securities 4,990 — Other investing activities — (283 ) NET CASH USED BY INVESTING ACTIVITIES (91,973 ) (95,950 ) FINANCING ACTIVITIES: Net change in borrowings (211 ) 159,270 Proceeds from exercise of stock options 13,397 5,715 Purchase of shares for treasury (7,748 ) (202,933 ) Cash dividends paid to shareholders (46,016 ) (44,647 ) Other financing activities (15,189 ) (18,244 ) NET CASH USED BY FINANCING ACTIVITIES (55,767 ) (100,839 ) Effect of exchange rate changes on Cash and cash equivalents 12,609 2,746 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,556 (67,164 ) Cash and cash equivalents at beginning of period 379,179 304,183 Cash and cash equivalents at end of period $ 395,735 $ 237,019 Cash dividends paid per share $ 0.70 $ 0.64 Lincoln Electric Holdings, Inc. Segment Highlights (In thousands) (Unaudited) Americas Welding International Welding The HarrisProductsGroup Corporate /Eliminations Consolidated Three months ended June 30, 2017 Net sales $ 405,147 $ 141,498 $ 80,213 $ — $ 626,858 Inter-segment sales 27,374 5,478 2,399 (35,251 ) — Total $ 432,521 $ 146,976 $ 82,612 $ (35,251 ) $ 626,858 EBIT (1) $ 74,498 $ 9,496 $ 9,787 $ (4,763 ) $ 89,018 As a percent of total sales 17.2 % 6.5 % 11.8 % 14.2 % Special items charge (3) — — — 4,498 4,498 Adjusted EBIT (2) $ 74,498 $ 9,496 $ 9,787 $ (265 ) $ 93,516 As a percent of total sales 17.2 % 6.5 % 11.8 % 14.9 % Three months ended June 30, 2016 Net sales $ 388,372 $ 132,815 $ 71,231 $ — $ 592,418 Inter-segment sales 23,456 3,841 2,824 (30,121 ) — Total $ 411,828 $ 136,656 $ 74,055 $ (30,121 ) $ 592,418 EBIT (1) $ 65,201 $ 9,670 $ 9,284 $ (34,646 ) $ 49,509 As a percent of total sales 15.8 % 7.1 % 12.5 % 8.4 % Special items charge (4) — — — 34,348 34,348 Adjusted EBIT (2) $ 65,201 $ 9,670 $ 9,284 $ (298 ) $ 83,857 As a percent of total sales 15.8 % 7.1 % 12.5 % 14.2 % Six months ended June 30, 2017 Net sales $ 788,471 $ 270,386 $ 148,898 $ — $ 1,207,755 Inter-segment sales 49,834 9,763 4,699 (64,296 ) — Total $ 838,305 $ 280,149 $ 153,597 $ (64,296 ) $ 1,207,755 EBIT (1) $ 143,221 $ 19,101 $ 18,247 $ (8,314 ) $ 172,255 As a percent of total sales 17.1 % 6.8 % 11.9 % 14.3 % Special items charge (3) — — — 8,113 8,113 Adjusted EBIT (2) $ 143,221 $ 19,101 $ 18,247 $ (201 ) $ 180,368 As a percent of total sales 17.1 % 6.8 % 11.9 % 14.9 % Six months ended June 30, 2016 Net sales $ 747,380 $ 257,120 $ 138,640 $ — $ 1,143,140 Inter-segment sales 47,287 8,267 5,127 (60,681 ) — Total $ 794,667 $ 265,387 $ 143,767 $ (60,681 ) $ 1,143,140 EBIT (1) $ 126,639 $ 15,903 $ 16,995 $ (33,449 ) $ 126,088 As a percent of total sales 15.9 % 6.0 % 11.8 % 11.0 % Special items charge (4) — — — 34,348 34,348 Adjusted EBIT (2) $ 126,639 $ 15,903 $ 16,995 $ 899 $ 160,436 As a percent of total sales 15.9 % 6.0 % 11.8 % 14.0 % (1) EBIT is defined as Operating income plus Equity earnings in affiliates and Other income. (2) The primary profit measure used by management to assess segment performance is Adjusted EBIT. EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT. (3) Special items reflect acquisition transaction and integration costs related to proposed acquisition of Air Liquide Welding. (4) Special items reflect a charge related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016. Lincoln Electric Holdings, Inc. Change in Net Sales by Segment (In thousands) (Unaudited) Three Months Ended June 30th Change in Net Sales by Segment Change in Net Sales due to: Net Sales 2016 Volume Acquisitions Price ForeignExchange Net Sales 2017 Operating Segments Americas Welding $ 388,372 $ 6,766 $ 1,354 $ 10,508 $ (1,853 ) $ 405,147 International Welding 132,815 4,377 — 4,423 (117 ) 141,498 The Harris Products Group 71,231 7,916 — 692 374 80,213 Consolidated $ 592,418 $ 19,059 $ 1,354 $ 15,623 $ (1,596 ) $ 626,858 Americas Welding (excluding Venezuela) $ 382,539 $ 12,599 $ 1,354 $ 10,508 $ (1,853 ) $ 405,147 Consolidated (excluding Venezuela) $ 586,585 $ 24,892 $ 1,354 $ 15,623 $ (1,596 ) $ 626,858 % Change Americas Welding 1.7 % 0.3 % 2.7 % (0.5 %) 4.3 % International Welding 3.3 % — 3.3 % (0.1 %) 6.5 % The Harris Products Group 11.1 % — 1.0 % 0.5 % 12.6 % Consolidated 3.2 % 0.2 % 2.6 % (0.3 %) 5.8 % Americas Welding (excluding Venezuela) 3.3 % 0.4 % 2.7 % (0.5 %) 5.9 % Consolidated (excluding Venezuela) (1) 4.2 % 0.2 % 2.7 % (0.3 %) 6.9 % Six Months Ended June 30th Change in Net Sales by Segment Change in Net Sales due to: Net Sales 2016 Volume Acquisitions Price Foreign Exchange Net Sales 2017 Operating Segments Americas Welding $ 747,380 $ 21,527 $ 4,692 $ 16,028 $ (1,156 ) $ 788,471 International Welding 257,120 7,724 — 7,622 (2,080 ) $ 270,386 The Harris Products Group 138,640 5,932 — 3,410 916 $ 148,898 Consolidated $ 1,143,140 $ 35,183 $ 4,692 $ 27,060 $ (2,320 ) $ 1,207,755 Americas Welding (excluding Venezuela) $ 736,566 $ 32,341 $ 4,692 $ 16,028 $ (1,156 ) $ 788,471 Consolidated (excluding Venezuela) $ 1,132,327 $ 45,996 $ 4,692 $ 27,060 $ (2,320 ) $ 1,207,755 % Change Americas Welding 2.9 % 0.6 % 2.1 % (0.2 %) 5.5 % International Welding 3.0 % — 3.0 % (0.8 %) 5.2 % The Harris Products Group 4.3 % — 2.5 % 0.7 % 7.4 % Consolidated 3.1 % 0.4 % 2.4 % (0.2 %) 5.7 % Americas Welding (excluding Venezuela) 4.4 % 0.6 % 2.2 % (0.2 %) 7.0 % Consolidated (excluding Venezuela) (1) 4.1 % 0.4 % 2.4 % (0.2 %) 6.7 % (1) Venezuelan sales in the three and six months ended June 30, 2016 were $6 million and $11 million, respectively. Contact Amanda Butler Director, Investor Relations Tel: 216.383.2534 Email: Amanda_Butler@lincolnelectric.com Lincoln Electric Holdings, Inc.
