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Lincoln Electric Reports Second Quarter 2022 Results

Jul 28 2022
 
Second Quarter 2022 Highlights
 
  • Net sales increase 17.3% to record $969.6 million on 20.5% higher organic sales
     
  • Record Operating and Adjusted operating income margin of 17.3%
     
  • EPS increases 36.3% to record $2.18; Adjusted EPS increases 30.5% to record $2.18
     
  • ROIC increases 490 basis points to 26.3%
     
  • Returned $57.7 million in the quarter and $195.6 million year-to-date to shareholders through dividends and share repurchases

CLEVELAND, July 28, 2022 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported second quarter 2022 net income of $127.8 million, or diluted earnings per share (EPS) of $2.18, which includes special item after-tax net charges of $0.4 million. This compares with prior year period net income of $96.1 million, or $1.60 EPS, which included special item after-tax charges of $4.5 million, or $0.07 EPS. Excluding these items, second quarter 2022 Adjusted net income was $128.2 million, or $2.18 Adjusted EPS. This compares with Adjusted net income of $100.6 million, or $1.67 Adjusted EPS, in the prior year period.

Second quarter 2022 sales increased 17.3% to $969.6 million from a 20.5% increase in organic sales and a 2.9% benefit from acquisitions, partially offset by 6.1% unfavorable foreign exchange. Operating income for the second quarter 2022 was $167.5 million, or 17.3% of sales. This compares with operating income of $121.8 million, or 14.7% of sales, in the prior year period. Excluding special items, Adjusted operating income was $168.1 million, or 17.3% of sales, as compared with $125.1 million, or 15.1% of sales, in the prior year period.

“I am pleased to report that we maintained strong momentum in the second quarter – achieving record sales, adjusted operating profit margin, earnings, and returns,” stated Christopher L. Mapes, Lincoln’s Chairman, President and Chief Executive Officer. “Solid industrial demand and automation sales in Americas Welding led growth and we achieved strong margin performance across both welding segments despite challenging operating conditions in International Welding.” Mapes continued, “I am proud of the continued success of our regional operating teams in mitigating the unprecedented headwinds we have been managing to effectively serve our customers and achieve our Higher Standard 2025 strategy goals.”

Six Months 2022 Summary

Net income for the six months ended June 30, 2022 was $253.9 million, or $4.30 EPS. This compares with $170.3 million, or $2.83 EPS, in the comparable 2021 period. Reported EPS includes special item after-tax net gains of $1.0 million or $0.01 EPS, as compared with special item after-tax net charges of $13.1 million, or $0.21 EPS in the prior year period. Excluding these items, adjusted net income for the six months ended June 30, 2022 increased 37.9% to $252.9 million, or $4.29 EPS, compared with $183.4 million, or $3.04 EPS, in the comparable 2021 period.

Sales increased 19.7% to $1.9 billion in the six months ended June 30, 2022 from a 21.3% increase in organic sales and a 3.7% benefit from acquisitions, partially offset by 5.3% unfavorable foreign exchange. Operating income for the six months ended June 30, 2022 was $328.7 million, or 17.3% of sales. This compares with operating income of $225.8 million, or 14.3% of sales, in the comparable 2021 period. Excluding special items, adjusted operating income was $331.2 million, or 17.5% of sales, as compared with $234.3 million, or 14.8% of sales, in the comparable 2021 period.

Webcast Information

A conference call to discuss second quarter 2022 financial results will be webcast live today, July 28, 2022, at 10:00 a.m., Eastern Time. Those interested in participating via webcast in listen-only mode can access the event here or on the Company's Investor Relations home page at https://ir.lincolnelectric.com. For participants who would like to participate via telephone, please register here to receive the dial-in number along with a unique PIN number that is required to access the call. A replay of the earnings call will be available via webcast on the Company's website.

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 materials 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 (“Adjusted EPS”), 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 the impact of the Russia-Ukraine conflict, 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, 2021 and on Form 10-Q for the quarter ended March 31, 2022.

 

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  
    2022     % of Sales      2021      % of Sales   $   %  
Net sales   $ 969,589       100.0  % $ 826,454   100.0  % $ 143,135     17.3   %
Cost of goods sold     636,108       65.6  %   552,445   66.8  %   (83,663 )   (15.1 ) %
Gross profit     333,481       34.4  %   274,009   33.2  %   59,472     21.7   %
Selling, general & administrative expenses     166,792       17.2  %   151,557   18.3  %   (15,235 )   (10.1 ) %
Rationalization and asset impairment charges     (844 )     0.1  %   630   0.1  %   1,474     234.0   %
Operating income     167,533       17.3  %   121,822   14.7  %   45,711     37.5   %
Interest expense, net     6,459       0.7  %   5,663   0.7  %   (796 )   (14.1 ) %
Other income (expense)     (1,134 )     0.1  %   1,702   0.2  %   (2,836 )   (166.6 ) %
Income before income taxes     159,940       16.5  %   117,861   14.3  %   42,079     35.7   %
Income taxes     32,118       3.3  %   21,581   2.6  %   (10,537 )   (48.8 ) %
Effective tax rate     20.1   %         18.3  %       (1.8 ) %    
Net income including non-controlling interests     127,822       13.2  %   96,280   11.6  %   31,542     32.8   %
Non-controlling interests in subsidiaries’ income (loss)     (1 )         175       (176 )   (100.6 ) %
Net income   $ 127,823       13.2  % $ 96,105   11.6  % $ 31,718     33.0   %
                                   
Basic earnings per share   $ 2.20           $ 1.62       $ 0.58     35.8   %
Diluted earnings per share   $ 2.18           $ 1.60       $ 0.58     36.3   %
Weighted average shares (basic)     58,016             59,464                
Weighted average shares (diluted)     58,688             60,164                

 

                                   
                             Fav (Unfav) to  
    Six Months Ended June 30,    Prior Year  
    2022   % of Sales      2021   % of Sales      $   %  
Net sales   $ 1,895,037     100.0  % $ 1,583,475   100.0  % $ 311,562     19.7   %
Cost of goods sold     1,231,779     65.0  %   1,055,699   66.7  %   (176,080 )   (16.7 ) %
Gross profit     663,258     35.0  %   527,776   33.3  %   135,482     25.7   %
Selling, general & administrative expenses     333,478     17.6  %   297,233   18.8  %   (36,245 )   (12.2 ) %
Rationalization and asset impairment charges     1,041     0.1  %   4,793   0.3  %   3,752     78.3   %
Operating income     328,739     17.3  %   225,750   14.3  %   102,989     45.6   %
Interest expense, net     12,657     0.7  %   11,022   0.7  %   (1,635 )   (14.8 ) %
Other income (expense)     3,500     0.2  %   286   0.0  %   3,214     1,123.8   %
Income before income taxes     319,582     16.9  %   215,014   13.6  %   104,568     48.6   %
Income taxes     65,729     3.5  %   44,601   2.8  %   (21,128 )   (47.4 ) %
Effective tax rate     20.6 %         20.7  %       0.1   %    
Net income including non-controlling interests     253,853     13.4  %   170,413   10.8  %   83,440     49.0   %
Non-controlling interests in subsidiaries’ income (loss)             131       (131 )   (100.0 ) %
Net income   $ 253,853     13.4  % $ 170,282   10.8  % $ 83,571     49.1   %
                                   
Basic earnings per share   $ 4.35         $ 2.86       $ 1.49     52.1   %
Diluted earnings per share   $ 4.30         $ 2.83       $ 1.47     51.9   %
Weighted average shares (basic)     58,311           59,553                
Weighted average shares (diluted)     58,970           60,229                


 

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

Balance Sheet Highlights

               
Selected Consolidated Balance Sheet Data      June 30, 2022      December 31, 2021  
Cash and cash equivalents   $ 152,796   $ 192,958  
Accounts receivable, net     518,371     429,074  
Inventories     639,393     539,919  
Total current assets     1,465,203     1,289,593  
Property, plant and equipment, net     503,088     511,744  
Total assets     2,741,813     2,592,307  
Trade accounts payable     364,495     330,230  
Total current liabilities     903,683     755,905  
Short-term debt (1)     125,458     52,730  
Long-term debt, less current portion     712,908     717,089  
Total equity     912,983     863,909  
               
Operating Working Capital   June 30, 2022   December 31, 2021  
Average operating working capital to Net sales (2)     19.0  %   16.3  %
               
Invested Capital   June 30, 2022   December 31, 2021  
Short-term debt (1)   $ 125,458   $ 52,730  
Long-term debt, less current portion     712,908     717,089  
Total debt     838,366     769,819  
Total equity     912,983     863,909  
Invested capital   $ 1,751,349   $ 1,633,728  
               
Total debt / invested capital     47.9  %   47.1  %
  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,   
    2022     2021       2022     2021    
Operating income as reported   $ 167,533     $ 121,822       $ 328,739     $ 225,750    
Special items (pre-tax):                            
Rationalization and asset impairment charges (2)     (844 )     630         1,041       4,793    
Acquisition transaction costs (3)           810               1,923    
Amortization of step up in value of acquired inventories (4)     1,459       1,841         1,459       1,841    
Adjusted operating income (1)   $ 168,148     $ 125,103       $ 331,239     $ 234,307    
As a percent of total sales     17.3   %   15.1   %     17.5   %   14.8   %
                             
Net income as reported   $ 127,823     $ 96,105       $ 253,853     $ 170,282    
Special items:                            
Rationalization and asset impairment charges (2)     (844 )     630         1,041       4,793    
Acquisition transaction costs (3)           810               1,923    
Pension charges and other net gains (5)           1,650         (4,273 )     6,536    
Amortization of step up in value of acquired inventories (4)     1,459       1,841         1,459       1,841    
Tax effect of Special items (6)     (252 )     (433 )       789       (1,994 )  
Adjusted net income (1)     128,186       100,603         252,869       183,381    
Non-controlling interests in subsidiaries’ income (loss)     (1 )     175               131    
Interest expense, net     6,459       5,663         12,657       11,022    
Income taxes as reported     32,118       21,581         65,729       44,601    
Tax effect of Special items (6)     252       433         (789 )     1,994    
Adjusted EBIT (1)   $ 167,014     $ 128,455       $ 330,466     $ 241,129    
                             
Effective tax rate as reported     20.1   %   18.3   %     20.6   %   20.7   %
Net special item tax impact     0.1   %   (0.4 ) %     (0.2 ) %   (0.5 ) %
Adjusted effective tax rate (1)     20.2   %   17.9   %     20.4   %   20.2   %
                             
Diluted earnings per share as reported   $ 2.18     $ 1.60       $ 4.30     $ 2.83    
Special items per share           0.07         (0.01 )     0.21    
Adjusted diluted earnings per share (1)   $ 2.18     $ 1.67       $ 4.29     $ 3.04    
                             
Weighted average shares (diluted)     58,688       60,164         58,970       60,229    
  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.
  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. Pension settlement charges due to lump sum pension payments and other net gains primarily due to the final settlement 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 June 30,   
Return on Invested Capital      2022        2021    
Net income as reported   $ 360,037     $ 293,839    
Rationalization and asset impairment charges     6,075       20,502    
Acquisition transaction costs           1,923    
Pension charges and other net gains     115,693       11,321    
Amortization of step up in value of acquired inventories     5,422       1,841    
Tax effect of Special items (2)     (44,405 )     (5,036 )  
Adjusted net income (1)   $ 442,822     $ 324,390    
Plus: Interest expense, net of tax of $6,336 and $5,843 in 2022 and 2021, respectively     18,832       17,368    
Less: Interest income, net of tax of $333 and $389 in 2022 and 2021, respectively     986       1,166    
Adjusted net income before tax-effected interest   $ 460,668     $ 340,592    
               
Invested Capital   June 30, 2022   June 30, 2021  
Short-term debt   $ 125,458     $ 10,435    
Long-term debt, less current portion     712,908       718,137    
Total debt     838,366       728,572    
Total equity     912,983       859,623    
Invested capital   $ 1,751,349     $ 1,588,195    
               
Return on invested capital (1)     26.3   %   21.4   %
  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 June 30, 
  2022     2021  
OPERATING ACTIVITIES:          
Net income $ 127,823     $ 96,105  
Non-controlling interests in subsidiaries’ income (loss)   (1 )     175  
Net income including non-controlling interests   127,822       96,280  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:          
Rationalization and asset impairment net gains   (1,301 )     (1,434 )
Depreciation and amortization   19,868       19,390  
Equity earnings in affiliates, net   (67 )     (114 )
Other non-cash items, net   11,043       (4,123 )
Changes in operating assets and liabilities, net of effects from acquisitions:          
Increase in accounts receivable   (17,839 )     (21,776 )
Increase in inventories   (57,187 )     (40,618 )
Increase in trade accounts payable   4,968       20,950  
Net change in other current assets and liabilities   14,210       24,950  
Net change in other long-term assets and liabilities   (3,306 )     6,467  
NET CASH PROVIDED BY OPERATING ACTIVITIES   98,211       99,972  
           
INVESTING ACTIVITIES:          
Capital expenditures   (15,930 )     (17,832 )
Acquisition of businesses, net of cash acquired   (82 )     (83,723 )
Proceeds from sale of property, plant and equipment   1,123       1,973  
NET CASH USED BY INVESTING ACTIVITIES   (14,889 )     (99,582 )
           
FINANCING ACTIVITIES:          
Net change in borrowings   (24,479 )     (144 )
Proceeds from exercise of stock options   382       2,892  
Purchase of shares for treasury   (25,119 )     (25,229 )
Cash dividends paid to shareholders   (32,553 )     (30,380 )
Other financing activities         (763 )
NET CASH USED BY FINANCING ACTIVITIES   (81,769 )     (53,624 )
           
Effect of exchange rate changes on Cash and cash equivalents   (3,130 )     1,992  
DECREASE IN CASH AND CASH EQUIVALENTS   (1,577 )     (51,242 )
Cash and cash equivalents at beginning of period   154,373       242,126  
Cash and cash equivalents at end of period $ 152,796     $ 190,884  
           
Cash dividends paid per share $ 0.56     $ 0.51  

 

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

Condensed Consolidated Statements of Cash Flows

       Six Months Ended June 30, 
    2022     2021  
OPERATING ACTIVITIES:            
Net income   $ 253,853     $ 170,282  
Non-controlling interests in subsidiaries’ income (loss)           131  
Net income including non-controlling interests     253,853       170,413  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:            
Rationalization and asset impairment net gains     (113 )     (1,374 )
Depreciation and amortization     39,759       38,508  
Equity earnings in affiliates, net     (180 )     (291 )
Other non-cash items, net     3,822       (4,820 )
Changes in operating assets and liabilities, net of effects from acquisitions:            
Increase in accounts receivable     (103,959 )     (87,571 )
Increase in inventories     (112,594 )     (83,186 )
Increase in trade accounts payable     44,252       63,275  
Net change in other current assets and liabilities     21,174       47,121  
Net change in other long-term assets and liabilities     (4,713 )     3,159  
NET CASH PROVIDED BY OPERATING ACTIVITIES     141,301       145,234  
             
INVESTING ACTIVITIES:            
Capital expenditures     (34,602 )     (27,768 )
Acquisition of businesses, net of cash acquired     (22,095 )     (83,723 )
Proceeds from sale of property, plant and equipment     1,692       2,557  
Other investing activities           6,500  
NET CASH USED BY INVESTING ACTIVITIES     (55,005 )     (102,434 )
             
FINANCING ACTIVITIES:            
Net change in borrowings     71,829       1,163  
Proceeds from exercise of stock options     1,417       5,672  
Purchase of shares for treasury     (129,698 )     (53,688 )
Cash dividends paid to shareholders     (65,914 )     (61,379 )
Other financing activities           (763 )
NET CASH USED BY FINANCING ACTIVITIES     (122,366 )     (108,995 )
             
Effect of exchange rate changes on Cash and cash equivalents     (4,092 )     (200 )
DECREASE IN CASH AND CASH EQUIVALENTS     (40,162 )     (66,395 )
Cash and cash equivalents at beginning of period     192,958       257,279  
Cash and cash equivalents at end of period   $ 152,796     $ 190,884  
             
Cash dividends paid per share   $ 1.12     $ 1.02  

 

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, 2022                                
Net sales   $ 595,659   $ 236,629   $ 137,301   $     $ 969,589  
Inter-segment sales     29,031     9,527     2,866     (41,424 )      
Total sales   $ 624,690   $ 246,156   $ 140,167   $ (41,424 )   $ 969,589  
                                 
Net income                           $ 127,823  
As a percent of total sales                             13.2 %
                                 
EBIT (1)   $ 117,606   $ 34,855   $ 17,922   $ (3,984 )   $ 166,399  
As a percent of total sales     18.8 %   14.2 %   12.8 %         17.2 %
Special items charges (gains) (3)     461     154               615  
Adjusted EBIT (2)   $ 118,067   $ 35,009   $ 17,922   $ (3,984 )   $ 167,014  
As a percent of total sales     18.9  %   14.2  %   12.8  %         17.2  %
                                 
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) (4)     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  %
  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 2022 primarily reflect the amortization of step up in value of acquired inventories of $1,459 in Americas Welding related to an acquisition and Rationalization and asset impairment net gains of $998 in Americas Welding and net charges of $154 in International Welding.
  4. 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 and acquisition transaction costs of $810 in Corporate/Eliminations.
     

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

                                 
       Americas      International      The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Six months ended June 30, 2022                                
Net sales   $ 1,129,714     $ 494,670   $ 270,653   $     $ 1,895,037    
Inter-segment sales     57,187       15,755     5,928     (78,870 )        
Total sales   $ 1,186,901     $ 510,425   $ 276,581   $ (78,870 )   $ 1,895,037    
                                 
Net income                           $ 253,853    
As a percent of total sales                             13.4   %
                                 
EBIT (1)   $ 232,909     $ 70,595   $ 37,520   $ (8,785 )   $ 332,239    
As a percent of total sales     19.6   %   13.8  %   13.6  %         17.5   %
Special items charges (gains) (3)     (3,274 )     1,501               (1,773 )  
Adjusted EBIT (2)   $ 229,635     $ 72,096   $ 37,520   $ (8,785 )   $ 330,466    
As a percent of total sales     19.3   %   14.1  %   13.6  %         17.4   %
                                 
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) (4)     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   %
  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 2022 primarily reflect Rationalization and asset impairment charges of $2,039 in International Welding and net gains of $998 in Americas Welding, amortization of step up in value of acquired inventories of $1,459 in Americas Welding and a $3,735 net gain related to final settlement associated with the termination of a pension plan in Americas Welding.
  4. 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.
     

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  
  2021   Volume   Acquisitions   Price   Exchange   2022  
Operating Segments                                    
Americas Welding $ 457,468   $ 45,284     $ 5,437   $ 89,854   $ (2,384 )   $ 595,659    
International Welding   252,352     (16,862 )         46,813     (45,674 )     236,629    
The Harris Products Group   116,634     (574 )     18,407     4,820     (1,986 )     137,301    
Consolidated $ 826,454   $ 27,848     $ 23,844   $ 141,487   $ (50,044 )   $ 969,589    
                                     
% Change                                    
Americas Welding         9.9   %   1.2  %   19.6  %   (0.5 ) %   30.2   %
International Welding         (6.7 ) %       18.6  %   (18.1 ) %   (6.2 ) %
The Harris Products Group         (0.5 ) %   15.8  %   4.1  %   (1.7 ) %   17.7   %
Consolidated         3.4   %   2.9  %   17.1  %   (6.1 ) %   17.3   %

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

                                       
             Change in Net Sales due to:        
    Net Sales                     Foreign   Net Sales  
    2021   Volume   Acquisitions   Price   Exchange   2022  
Operating Segments                                      
Americas Welding   $ 882,710   $ 67,288     $ 7,182   $ 174,072   $ (1,538 )   $ 1,129,714  
International Welding     475,431     (17,886 )     17,632     99,003     (79,510 )     494,670  
The Harris Products Group     225,334     2,568       33,859     11,543     (2,651 )     270,653  
Consolidated   $ 1,583,475   $ 51,970     $ 58,673   $ 284,618   $ (83,699 )   $ 1,895,037  
                                       
% Change                                      
Americas Welding           7.6   %   0.8  %   19.7  %   (0.2 ) %   28.0  %
International Welding           (3.8 ) %   3.7  %   20.8  %   (16.7 ) %   4.0  %
The Harris Products Group           1.1   %   15.0  %   5.1  %   (1.2 ) %   20.1  %
Consolidated           3.3   %   3.7  %   18.0  %   (5.3 ) %   19.7  %

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