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Lincoln Electric Reports Second Quarter 2021 Results

Jul 27 2021

 

 
Second Quarter 2021 Highlights
  • Net sales increase 39.9% to $826.5 million on 36.0% higher organic sales
     
  • Operating income margin of 14.7%; Adjusted operating income margin of 15.1%
     
  • EPS increases 255.6% to record $1.60; Adjusted EPS increases 108.8% to record $1.67
     
  • Strong cash flow from operations of $100.0 million
     
  • ROIC increases 280 basis points to 21.4%

CLEVELAND, July 27, 2021 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported second quarter 2021 net income of $96.1 million, or diluted earnings per share (EPS) of $1.60, which includes special item after-tax charges of $4.5 million, or $0.07 EPS. This compares with prior year period net income of $27.0 million, or $0.45 EPS, which included special item after-tax charges of $21.0 million, or $0.35 EPS. Excluding these items, second quarter 2021 Adjusted net income was $100.6 million, or $1.67 Adjusted EPS. This compares with Adjusted net income of $48.0 million, or $0.80 Adjusted EPS in the prior year period.

Second quarter 2021 sales increased 39.9% to $826.5 million from a 36.0% increase in organic sales, 3.3% favorable foreign exchange and a 0.6% benefit from acquisitions. Operating income for the second quarter 2021 was $121.8 million, or 14.7% of sales, including special item charges of $3.3 million. This compares with operating income of $39.8 million, or 6.7% of sales, in the prior year period. Excluding special items, Adjusted operating income was $125.1 million, or 15.1% of sales, as compared with $63.0 million, or 10.7% of sales, in the prior year period.

“We achieved record second quarter earnings performance while servicing accelerating demand and improving productivity in a challenging operating environment,” said Christopher L. Mapes, Chairman, President and Chief Executive Officer. “The team has done a superb job working through supply chain constraints and mitigating inflationary headwinds, which we expect will continue through 2021.” Mapes continued, “With 80% of our revenue driven by growing end markets, we are accelerating our investments in growth and operational excellence to deliver superior value to our stakeholders through this cycle.”

Six Months 2021 Summary

Net income for the six months ended June 30, 2021 was $170.3 million, or $2.83 EPS. This compares with $82.6 million, or $1.37 EPS, in the comparable 2020 period. Reported EPS includes special item after-tax charges of $13.1 million or $0.21 EPS, as compared with special item after-tax net charges of $26.3 million, or $0.44 EPS in the prior year period. Excluding these items, adjusted net income for the six months ended June 30, 2021 increased 68.4% to $183.4 million, or $3.04 EPS, compared with $108.9 million, or $1.81 EPS, in the comparable 2020 period.

Sales increased 22.5% to $1.6 billion in the six months ended June 30, 2021 from a 20.0% increase in organic sales, 2.3% favorable foreign exchange and a 0.3% benefit from acquisitions. Operating income for the six months ended June 30, 2021 was $225.8 million, or 14.3% of sales. This compares with operating income of $120.8 million, or 9.3% of sales, in the comparable 2020 period. Excluding special items, adjusted operating income was $234.3 million, or 14.8% of sales, as compared with $151.4 million, or 11.7% of sales, in the comparable 2020 period.

Webcast Information

A conference call to discuss second quarter 2021 financial results will be webcast live today, July 27, 2021, 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 9053554. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

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

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment and has a leading global position in brazing and soldering alloys.  Headquartered in Cleveland, Ohio, Lincoln has 55 manufacturing locations in 18 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 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, Return on invested capital and Earnings before interest, taxes, depreciation and amortization ("EBITDA") 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 June 30,    Prior Year  
    2021   % of Sales      2020        % of Sales   $   %  
Net sales   $ 826,454     100.0 % $ 590,727     100.0 % $ 235,727     39.9   %
Cost of goods sold     552,445     66.8 %   401,349     67.9 %   (151,096 )   (37.6 ) %
Gross profit     274,009     33.2 %   189,378     32.1 %   84,631     44.7   %
Selling, general & administrative expenses     151,557     18.3 %   126,376     21.4 %   (25,181 )   (19.9 ) %
Rationalization and asset impairment charges     630     0.1 %   23,238     3.9 %   22,608     97.3   %
Operating income     121,822     14.7 %   39,764     6.7 %   82,058     206.4   %
Interest expense, net     5,663     0.7 %   5,881     1.0 %   218     3.7   %
Other income (expense)     1,702     0.2 %   (203 )       1,905     938.4   %
Income before income taxes     117,861     14.3 %   33,680     5.7 %   84,181     249.9   %
Income taxes     21,581     2.6 %   6,667     1.1 %   (14,914 )   (223.7 ) %
Effective tax rate     18.3 %         19.8   %        1.5   %     
Net income including non-controlling interests     96,280     11.6 %   27,013     4.6 %   69,267     256.4   %
Non-controlling interests in subsidiaries’ income (loss)     175         17         158     929.4   %
Net income   $ 96,105     11.6 % $ 26,996     4.6 % $ 69,109     256.0   %
                                   
Basic earnings per share   $ 1.62         $ 0.45         $ 1.17     260.0   %
Diluted earnings per share   $ 1.60         $ 0.45         $ 1.15     255.6   %
Weighted average shares (basic)     59,464           59,354                     
Weighted average shares (diluted)     60,164           59,831                    

 

                                 
                              Fav (Unfav) to  
    Six Months Ended June 30,    Prior Year  
    2021   % of Sales      2020   % of Sales      $   %  
Net sales   $ 1,583,475   100.0 $ 1,292,718   100.0 $ 290,757     22.5  
Cost of goods sold     1,055,699   66.7   866,018   67.0   (189,681 )   (21.9 )
Gross profit     527,776   33.3   426,700   33.0   101,076     23.7  
Selling, general & administrative expenses     297,233   18.8   276,103   21.4   (21,130 )   (7.7 )
Rationalization and asset impairment charges     4,793   0.3   29,759   2.3   24,966     83.9  
Operating income     225,750   14.3   120,838   9.3   104,912     86.8  
Interest expense, net     11,022   0.7   11,339   0.9   317     2.8  
Other income (expense)     286       106       180     169.8  
Income before income taxes     215,014   13.6   109,605   8.5   105,409     96.2  
Income taxes     44,601   2.8   27,037   2.1   (17,564 )   (65.0 )
Effective tax rate     20.7 %       24.7 %        4.0   %     
Net income including non-controlling interests     170,413   10.8   82,568   6.4   87,845     106.4  
Non-controlling interests in subsidiaries’ income (loss)     131       10       121     1,210.0  
Net income   $ 170,282   10.8 $ 82,558   6.4 $ 87,724     106.3  
                                 
Basic earnings per share   $ 2.86       $ 1.38       $ 1.48     107.2  
Diluted earnings per share   $ 2.83       $ 1.37       $ 1.46     106.6  
Weighted average shares (basic)     59,553         59,769                   
Weighted average shares (diluted)     60,229         60,300                   


 

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

Balance Sheet Highlights

               
Selected Consolidated Balance Sheet Data      June 30, 2021      December 31, 2020  
Cash and cash equivalents   $ 190,884   $ 257,279  
Accounts receivable, net     457,454     373,487  
Inventories     477,677     381,258  
Total current assets     1,237,940     1,112,343  
Property, plant and equipment, net     513,686     522,092  
Total assets     2,512,726     2,314,453  
Trade accounts payable     317,771     256,530  
Total current liabilities     696,020     549,449  
Short-term debt (1)     10,435     2,734  
Long-term debt, less current portion     718,137     715,456  
Total equity     859,623     790,250  
               
Operating Working Capital   June 30, 2021   December 31, 2020  
Average operating working capital to Net sales (2)     17.2 %     17.4 %
               
Invested Capital   June 30, 2021   December 31, 2020  
Short-term debt (1)   $ 10,435   $ 2,734  
Long-term debt, less current portion     718,137     715,456  
Total debt     728,572     718,190  
Total equity     859,623     790,250  
Invested capital   $ 1,588,195   $ 1,508,440  
               
Total debt / invested capital     45.9 %     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 June 30,      Six Months Ended June 30,   
    2021     2020       2021     2020    
Operating income as reported   $ 121,822     $ 39,764       $ 225,750     $ 120,838    
Special items (pre-tax):                                
Rationalization and asset impairment charges (2)     630       23,238         4,793       29,759    
Acquisition transaction costs (3)     810               1,923          
Amortization of step up in value of acquired inventories (4)     1,841               1,841       806    
Adjusted operating income (1)   $ 125,103     $ 63,002       $ 234,307     $ 151,403    
As a percent of total sales     15.1   %   10.7   %     14.8   %   11.7   %
                             
Net income as reported   $ 96,105     $ 26,996       $ 170,282     $ 82,558    
Special items:                                
Rationalization and asset impairment charges (2)     630       23,238         4,793       29,759    
Acquisition transaction costs (3)     810               1,923          
Pension settlement charges (5)     1,650       3,334         6,536       3,334    
Amortization of step up in value of acquired inventories (4)     1,841               1,841       806    
Tax effect of Special items (6)     (433 )     (5,576 )       (1,994 )     (7,552 )  
Adjusted net income (1)     100,603       47,992         183,381       108,905    
Non-controlling interests in subsidiaries’ income (loss)     175       17         131       10    
Interest expense, net     5,663       5,881         11,022       11,339    
Income taxes as reported     21,581       6,667         44,601       27,037    
Tax effect of Special items (6)     433       5,576         1,994       7,552    
Adjusted EBIT (1)   $ 128,455     $ 66,133       $ 241,129     $ 154,843    
                             
Effective tax rate as reported     18.3   %   19.8   %     20.7   %   24.7   %
Net special item tax impact     (0.4 ) %   0.5   %     (0.5 ) %   (0.6 ) %
Adjusted effective tax rate (1)     17.9   %   20.3   %     20.2   %   24.1   %
                             
Diluted earnings per share as reported   $ 1.60     $ 0.45       $ 2.83     $ 1.37    
Special items per share     0.07       0.35         0.21       0.44    
Adjusted diluted earnings per share (1)   $ 1.67     $ 0.80       $ 3.04     $ 1.81    
                             
Weighted average shares (diluted)     60,164       59,831         60,229       60,300    
  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 an acquisition and are included in Selling, general & administrative expenses.
  4. Related to acquisitions and are included in Cost of goods sold.
  5. Related to lump sum pension payments 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 June 30,   
Return on Invested Capital      2021        2020    
Net income as reported   $ 293,839     $ 218,735    
Rationalization and asset impairment charges     20,502       40,105    
Acquisition transaction costs     1,923          
Pension settlement charges     11,321       3,334    
Amortization of step up in value of acquired inventories     1,841       2,415    
Gain on change in control           (7,601 )  
Tax effect of Special items (2)     (5,036 )     (9,374 )  
Adjusted net income (1)   $ 324,390     $ 247,614    
Plus: Interest expense, net of tax of $5,843 and $6,439 in 2021 and 2020, respectively     17,368       19,348    
Less: Interest income, net of tax of $389 and $563 in 2021 and 2020, respectively     1,166       1,691    
Adjusted net income before tax-effected interest   $ 340,592     $ 265,271    
               
Invested Capital   June 30, 2021   June 30, 2020  
Short-term debt   $ 10,435     $ 49,597    
Long-term debt, less current portion     718,137       715,817    
Total debt     728,572       765,414    
Total equity     859,623       660,111    
Invested capital   $ 1,588,195     $ 1,425,525    
               
Return on invested capital (1)     21.4   %     18.6   %

 

             
       Twelve Months Ended June 30, 
Total Debt / EBITDA   2021   2020
Net income as reported   $ 293,839   $ 218,735
Income taxes          75,460          62,955
Interest expense, net     21,656     23,533
Depreciation and amortization     77,922     83,313
EBITDA (1)   $ 468,877   $ 388,536
             
    June 30, 2021   June 30, 2020
Total debt   $ 728,572   $ 765,414
             
Total debt / EBITDA     1.55     1.97
  1. Adjusted net income, Return on invested capital and EBITDA 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 June 30, 
  2021     2020  
OPERATING ACTIVITIES:            
Net income $ 96,105     $ 26,996  
Non-controlling interests in subsidiaries’ income (loss)   175       17  
Net income including non-controlling interests   96,280       27,013  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:            
Rationalization and asset impairment net (gains) charges   (1,434 )     22,141  
Depreciation and amortization   19,390       20,050  
Equity earnings in affiliates, net   (114 )     (81 )
Other non-cash items, net   (4,123 )     (1,106 )
Changes in operating assets and liabilities, net of effects from acquisitions:            
(Increase) decrease in accounts receivable   (21,776 )     49,364  
Increase in inventories   (40,618 )     (12,977 )
Increase (decrease) in trade accounts payable   20,950       (23,439 )
Net change in other current assets and liabilities   24,950       20,717  
Net change in other long-term assets and liabilities   6,467       2,359  
NET CASH PROVIDED BY OPERATING ACTIVITIES   99,972       104,041  
           
INVESTING ACTIVITIES:            
Capital expenditures   (17,832 )     (13,183 )
Acquisition of businesses, net of cash acquired   (83,723 )      
Proceeds from sale of property, plant and equipment   1,973       118  
NET CASH USED BY INVESTING ACTIVITIES   (99,582 )     (13,065 )
           
FINANCING ACTIVITIES:            
Net change in borrowings   (144 )     (82,682 )
Proceeds from exercise of stock options   2,892       955  
Purchase of shares for treasury   (25,229 )     (3,213 )
Cash dividends paid to shareholders   (30,380 )     (29,139 )
Other financing activities   (763 )      
NET CASH USED BY FINANCING ACTIVITIES   (53,624 )     (114,079 )
           
Effect of exchange rate changes on Cash and cash equivalents   1,992       2,783  
DECREASE IN CASH AND CASH EQUIVALENTS   (51,242 )     (20,320 )
Cash and cash equivalents at beginning of period   242,126       163,375  
Cash and cash equivalents at end of period $ 190,884     $ 143,055  
           
Cash dividends paid per share $ 0.51     $ 0.49  


 

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

       Six Months Ended June 30, 
    2021     2020  
OPERATING ACTIVITIES:              
Net income   $ 170,282     $ 82,558  
Non-controlling interests in subsidiaries’ income (loss)     131       10  
Net income including non-controlling interests     170,413       82,568  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:              
Rationalization and asset impairment net (gains) charges     (1,374 )     21,905  
Depreciation and amortization     38,508       41,078  
Equity earnings in affiliates, net     (291 )     (243 )
Other non-cash items, net     (4,820 )     (5,288 )
Changes in operating assets and liabilities, net of effects from acquisitions:              
(Increase) decrease in accounts receivable     (87,571 )     23,666  
Increase in inventories     (83,186 )     (30,378 )
Increase (decrease) in trade accounts payable     63,275       (40,115 )
Net change in other current assets and liabilities     47,121       32,410  
Net change in other long-term assets and liabilities     3,159       410  
NET CASH PROVIDED BY OPERATING ACTIVITIES     145,234       126,013  
             
INVESTING ACTIVITIES:              
Capital expenditures     (27,768 )     (25,011 )
Acquisition of businesses, net of cash acquired     (83,723 )      
Proceeds from sale of property, plant and equipment     2,557       6,218  
Other investing activities     6,500        
NET CASH USED BY INVESTING ACTIVITIES     (102,434 )     (18,793 )
             
FINANCING ACTIVITIES:              
Net change in borrowings     1,163       15,095  
Proceeds from exercise of stock options     5,672       2,002  
Purchase of shares for treasury     (53,688 )     (112,975 )
Cash dividends paid to shareholders     (61,379 )     (59,814 )
Other financing activities     (763 )      
NET CASH USED BY FINANCING ACTIVITIES     (108,995 )     (155,692 )
             
Effect of exchange rate changes on Cash and cash equivalents     (200 )     (8,036 )
DECREASE IN CASH AND CASH EQUIVALENTS     (66,395 )     (56,508 )
Cash and cash equivalents at beginning of period     257,279       199,563  
Cash and cash equivalents at end of period   $ 190,884     $ 143,055  
             
Cash dividends paid per share   $ 1.02     $ 0.98  

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

       Americas      International       The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Three months ended June 30, 2021                                     
Net sales   $ 457,468   $ 252,352   $ 116,634   $     $ 826,454  
Inter-segment sales     39,765     6,897     2,284     (48,946 )      
Total sales   $ 497,233   $ 259,249   $ 118,918   $ (48,946 )   $ 826,454  
                                 
Net income                              $ 96,105  
As a percent of total sales                                11.6 %
                                 
EBIT (1)   $ 82,484   $ 27,526   $ 18,212   $ (4,698 )   $ 123,524  
As a percent of total sales     16.6 %     10.6 %     15.3 %           14.9 %
Special items charges (gains) (3)     1,650     2,471         810       4,931  
Adjusted EBIT (2)   $ 84,134   $ 29,997   $ 18,212   $ (3,888 )   $ 128,455  
As a percent of total sales     16.9 %     11.6 %     15.3 %           15.5 %
                                 
Three months ended June 30, 2020                                     
Net sales   $ 333,229   $ 177,167   $ 80,331   $     $ 590,727  
Inter-segment sales     27,493     4,286     1,753     (33,532 )      
Total sales   $ 360,722   $ 181,453   $ 82,084   $ (33,532 )   $ 590,727  
                                 
Net income                              $ 26,996  
As a percent of total sales                                4.6 %
                                 
EBIT (1)   $ 20,695   $ 9,117   $ 11,713   $ (1,964 )   $ 39,561  
As a percent of total sales     5.7 %     5.0 %     14.3 %           6.7 %
Special items charges (gains) (4)     26,007     565               26,572  
Adjusted EBIT (2)   $ 46,702   $ 9,682   $ 11,713   $ (1,964 )   $ 66,133  
As a percent of total sales     12.9 %     5.3 %     14.3 %           11.2 %

(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 $630 in International Welding, pension settlement charges of $1,650 in Americas Welding, amortization of step up in value of acquired inventories of $1,841 in International Welding related to an acquisition and acquisition transaction costs of $810 in Corporate/Eliminations related to an acquisition.

(4)        Special items in 2020 reflect Rationalization and asset impairment charges of $22,673 and $565 in Americas Welding and International Welding, respectively, and pension settlement charges of $3,334 in Americas Welding.

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

                                 
       Americas      International      The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Six months ended June 30, 2021                                     
Net sales   $ 882,710   $ 475,431   $ 225,334   $     $ 1,583,475  
Inter-segment sales     72,513     11,182     4,431     (88,126 )      
Total sales   $ 955,223   $ 486,613   $ 229,765   $ (88,126 )   $ 1,583,475  
                                 
Net income                              $ 170,282  
As a percent of total sales                                10.8 %
                                 
EBIT (1)   $ 154,661   $ 41,733   $ 36,909   $ (7,267 )   $ 226,036  
As a percent of total sales     16.2 %     8.6 %     16.1 %           14.3 %
Special items charges (gains) (3)     6,090     7,080         1,923       15,093  
Adjusted EBIT (2)   $ 160,751   $ 48,813   $ 36,909   $ (5,344 )   $ 241,129  
As a percent of total sales     16.8 %     10.0 %     16.1 %           15.2 %
                                 
Six months ended June 30, 2020                                     
Net sales   $ 751,764   $ 375,090   $ 165,864   $     $ 1,292,718  
Inter-segment sales     52,276     8,769     3,478     (64,523 )      
Total sales   $ 804,040   $ 383,859   $ 169,342   $ (64,523 )   $ 1,292,718  
                                 
Net income                              $ 82,558  
As a percent of total sales                                6.4 %
                                 
EBIT (1)   $ 90,207   $ 9,595   $ 24,205   $ (3,063 )   $ 120,944  
As a percent of total sales     11.2 %     2.5 %     14.3 %           9.4 %
Special items charges (gains) (4)     27,197     6,702               33,899  
Adjusted EBIT (2)   $ 117,404   $ 16,297   $ 24,205   $ (3,063 )   $ 154,843  
As a percent of total sales     14.6 %     4.2 %     14.3 %           12.0 %

(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 pension settlement charges of $6,090 and $446 in Americas Welding and International Welding, respectively, Rationalization and asset impairment charges of $4,793 in International Welding, amortization of step up in value of acquired inventories of $1,841 in International Welding and acquisition transaction costs of $1,923 in Corporate/Eliminations related to an acquisition.

(4)        Special items in 2020 reflect Rationalization and asset impairment charges of $23,863 and $5,896 in Americas Welding and International Welding, respectively, amortization of step up in value of acquired inventories of $806 in International Welding related to an acquisition, and pension settlement charges of $3,334 in Americas Welding.

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                     Foreign   Net Sales  
  2020   Volume   Acquisitions   Price   Exchange   2021  
Operating Segments                                          
Americas Welding $ 333,229   $ 90,285   $   $ 27,330   $ 6,624   $ 457,468  
International Welding   177,167     45,095     3,585     14,712     11,793     252,352  
The Harris Products Group   80,331     18,421         16,979     903     116,634  
Consolidated $ 590,727   $ 153,801   $ 3,585   $ 59,021   $ 19,320   $ 826,454  
                                     
% Change                                          
Americas Welding         27.1 %       8.2 %   2.0 %   37.3 %
International Welding         25.5 %   2.0 %   8.3 %   6.7 %   42.4 %
The Harris Products Group         22.9 %       21.1 %   1.1 %   45.2 %
Consolidated         26.0 %   0.6 %   10.0 %   3.3 %   39.9 %

Six Months Ended June 30th 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   $ 751,764   $ 86,495   $   $ 36,395   $ 8,056     $ 882,710  
International Welding     375,090     56,345     3,585     19,332     21,079       475,431  
The Harris Products Group     165,864     30,062         29,422     (14 )     225,334  
Consolidated   $ 1,292,718   $ 172,902   $ 3,585   $ 85,149   $ 29,121     $ 1,583,475  
                                       
% Change                                            
Americas Welding           11.5 %       4.8 %   1.1   %   17.4 %
International Welding           15.0 %   1.0 %   5.2 %   5.6   %   26.8 %
The Harris Products Group           18.1 %       17.7 %         35.9 %
Consolidated           13.4 %   0.3 %   6.6 %   2.3   %   22.5 %

 


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