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Lincoln Electric Reports Third Quarter 2014 Results

Oct 30 2014
Adjusted EPS increases 9% to $0.94

CLEVELAND, Oct. 30, 2014 /PRNewswire/ --

Third Quarter 2014 Highlights

  • Reported sales increased 3.5% to $716 million; up 5.8% excluding unfavorable foreign exchange translation
  • Operating income of $76 million, or 10.6% of sales, includes rationalization and asset impairment charges of $29 million
  • Adjusted operating income increased 3.7% to $105 million, or 14.7% of sales
  • Cash flows from operations up 10.7% to $268 million on a year-to-date basis
  • Returned $148 million to shareholders and significantly increased share repurchase program

 

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported third quarter 2014 net income of $45.7 million, or $0.57 per diluted share, which includes rationalization and asset impairment charges of $29.1 million.  This compares with net income of $66.0 million, or $0.80 per diluted share, in the comparable 2013 period.  Adjusted net income was $74.9 million, or $0.94 per diluted share, compared to adjusted net income of $71.1 million, or $0.86 per diluted share, in the comparable 2013 period.

Sales increased 3.5% to $715.8 million in the third quarter 2014 versus $691.9 million in the comparable 2013 period.  Operating income for the third quarter decreased 20.0% to $76.1 million, or 10.6% of sales, from $95.2 million, or 13.8% of sales, in the comparable 2013 period.  Adjusted operating income increased 3.7% to $105.2 million or 14.7% of sales, compared with $101.5 million, or 14.7% of sales in 2013.

Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.1 million.  These non-cash asset impairment charges primarily related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $3.4 million primarily representing a gain on the sale of real estate.  These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased with the underlying quality of our earnings this quarter, which were driven by strong top-line growth and margin contributions from our North America Welding and Europe Welding segments.  This performance more than offset a challenging year-over-year comparison from our Venezuela business.  Looking ahead, improving end market trends and demand for our innovative solutions combined with benefits from our strategic initiatives and accelerated returns, position us well to continue to deliver value to all of our stakeholders."

Dividend and Share Repurchases

The Company's Board of Directors declared a 26% increase in the quarterly cash dividend, from $0.23 per share to $0.29, or to $1.16 per share on an annualized basis.  The declared quarterly cash dividend of $0.29 per share is payable January 15, 2015 to shareholders of record as of December 31, 2014.

During the quarter, the Company returned $130.1 million to shareholders through the repurchase of 1,867,204 of the Company's common shares.  The Company has now increased its 2014 share repurchase target to $300 million of the Company's common shares.  

Nine Months 2014 Summary

Net income for the nine months ended September 30, 2014 was $179.5 million, or $2.22 per diluted share, which includes rationalization and asset impairment charges of $29.9 million and charges of $21.1 million from Venezuelan foreign exchange remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter.  This compares with net income of $205.5 million, or $2.47 per diluted share, in 2013.  Adjusted net income was $230.5 million, or $2.86 per diluted share, compared to adjusted net income of $224.0 million, or $2.69 per diluted share, in 2013.  Adjusted net income for the nine months ended September 30, 2014 includes earnings of $0.17 per diluted share from the Company's Venezuelan operations as compared to $0.24 per diluted share in the comparable 2013 period. 

Sales remained relatively steady at $2.1 billion in the nine months ended September 30, 2014 and the comparable 2013 period.  This result reflects lower volumes and unfavorable foreign exchange translation being offset by pricing actions and acquisitions.  Operating income for the nine months ended September 30, 2014 decreased to $268.8 million, or 12.6% of sales, compared to $288.1 million, or 13.5% of sales, in the comparable 2013 period.  Adjusted operating income increased 3.7% to $319.9 million or 15.0% of sales, compared with $308.5 million, or 14.4% 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.

Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.9 million.  Charges consist of non-cash asset impairment charges related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $2.5 million primarily representing a gain on the sale of real estate.  These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.

Webcast Information

A conference call to discuss third quarter 2014 financial results will be webcast live today, Thursday, October 30, 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 17603361.  Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the third 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; 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, 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 September 30,

 

Fav (Unfav) to Prior Year

   

2014

   

% of Sales

 

2013

   

% of Sales

 

$

 

%

Net sales

 

$

715,777

   

100.0

%

 

$

691,875

   

100.0

%

 

$

23,902

   

3.5

%

Cost of goods sold

 

474,168

   

66.2

%

 

459,178

   

66.4

%

 

(14,990)

   

(3.3)

%

Gross profit

 

241,609

   

33.8

%

 

232,697

   

33.6

%

 

8,912

   

3.8

%

Selling, general & administrative expenses

 

136,424

   

19.1

%

 

131,217

   

19.0

%

 

(5,207)

   

(4.0)

%

Rationalization and asset impairment charges

 

29,068

   

4.1

%

 

6,302

   

0.9

%

 

(22,766)

   

(361.3)

%

Operating income

 

76,117

   

10.6

%

 

95,178

   

13.8

%

 

(19,061)

   

(20.0)

%

Interest income

 

627

   

0.1

%

 

536

   

0.1

%

 

91

   

17.0

%

Equity earnings in affiliates

 

1,172

   

0.2

%

 

1,170

   

0.2

%

 

2

   

0.2

%

Other income

 

1,043

   

0.1

%

 

1,514

   

0.2

%

 

(471)

   

(31.1)

%

Interest expense

 

(1,174)

   

(0.2)

%

 

(558)

   

(0.1)

%

 

(616)

   

(110.4)

%

Income before income taxes

 

77,785

   

10.9

%

 

97,840

   

14.1

%

 

(20,055)

   

(20.5)

%

Income taxes

 

32,953

   

4.6

%

 

33,588

   

4.9

%

 

635

   

1.9

%

Effective tax rate

 

42.4

%

       

34.3

%

       

(8.1)

%

     

Net income including non-controlling interests

 

44,832

   

6.3

%

 

64,252

   

9.3

%

 

(19,420)

   

(30.2)

%

Non-controlling interests in subsidiaries' loss

 

(857)

   

(0.1)

%

 

(1,792)

   

(0.3)

%

 

935

   

52.2

%

Net income

 

$

45,689

   

6.4

%

 

$

66,044

   

9.5

%

 

$

(20,355)

   

(30.8)

%

                                     

Basic earnings per share

 

$

0.58

         

$

0.81

         

$

(0.23)

   

(28.4)

%

Diluted earnings per share

 

$

0.57

         

$

0.80

         

$

(0.23)

   

(28.8)

%

Weighted average shares (basic)

 

78,817

         

81,644

                   

Weighted average shares (diluted)

 

79,725

         

82,707

                   
                                     
   

Nine months ended September 30,

 

Fav (Unfav) to Prior Year

   

2014

   

% of Sales

 

2013

   

% of Sales

 

$

 

%

Net sales

 

$

2,129,370

   

100.0

%

 

$

2,137,880

   

100.0

%

 

$

(8,510)

   

(0.4)

%

Cost of goods sold

 

1,411,158

   

66.3

%

 

1,438,273

   

67.3

%

 

27,115

   

1.9

%

Gross profit

 

718,212

   

33.7

%

 

699,607

   

32.7

%

 

18,605

   

2.7

%

Selling, general & administrative expenses

 

419,495

   

19.7

%

 

403,323

   

18.9

%

 

(16,172)

   

(4.0)

%

Rationalization and asset impairment charges

 

29,887

   

1.4

%

 

8,204

   

0.4

%

 

(21,683)

   

(264.3)

%

Operating income

 

268,830

   

12.6

%

 

288,080

   

13.5

%

 

(19,250)

   

(6.7)

%

Interest income

 

2,465

   

0.1

%

 

2,452

   

0.1

%

 

13

   

0.5

%

Equity earnings in affiliates

 

4,308

   

0.2

%

 

3,687

   

0.2

%

 

621

   

16.8

%

Other income

 

3,204

   

0.2

%

 

3,141

   

0.1

%

 

63

   

2.0

%

Interest expense

 

(3,730)

   

(0.2)

%

 

(2,307)

   

(0.1)

%

 

(1,423)

   

(61.7)

%

Income before income taxes

 

275,077

   

12.9

%

 

295,053

   

13.8

%

 

(19,976)

   

(6.8)

%

Income taxes

 

96,532

   

4.5

%

 

91,431

   

4.3

%

 

(5,101)

   

(5.6)

%

Effective tax rate

 

35.1

%

       

31.0

%

       

(4.1)

%

     

Net income including non-controlling interests

 

178,545

   

8.4

%

 

203,622

   

9.5

%

 

(25,077)

   

(12.3)

%

Non-controlling interests in subsidiaries' loss

 

(929)

   

   

(1,834)

   

(0.1)

%

 

905

   

49.3

%

Net income

 

$

179,474

   

8.4

%

 

$

205,456

   

9.6

%

 

$

(25,982)

   

(12.6)

%

                                     

Basic earnings per share

 

$

2.25

         

$

2.50

         

$

(0.25)

   

(10.0)

%

Diluted earnings per share

 

$

2.22

         

$

2.47

         

$

(0.25)

   

(10.1)

%

Weighted average shares (basic)

 

79,779

         

82,260

                   

Weighted average shares (diluted)

 

80,702

         

83,314

                   

 

 

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

 

Non-GAAP Financial Measures

 
   
   

Three months ended September 30,

   

Nine months ended September 30,

 
   

2014

   

2013

   

2014

   

2013

 

Operating income as reported

 

$

76,117

   

$

95,178

   

$

268,830

   

$

288,080

 

Special items (pre-tax):

                       

Rationalization and asset impairment charges (1)

 

29,068

   

6,302

   

29,887

   

8,204

 

Venezuela foreign exchange losses (2)

 

   

   

21,133

   

12,198

 

Adjusted operating income (4)

 

$

105,185

   

$

101,480

   

$

319,850

   

$

308,482

 
                         

Net income as reported

 

$

45,689

   

$

66,044

   

$

179,474

   

$

205,456

 

Special items (after-tax):

                       

Rationalization and asset impairment charges (1)

 

30,056

   

6,098

   

30,747

   

7,350

 

Venezuela foreign exchange losses (2)

 

   

   

21,133

   

12,198

 

Special items attributable to non-controlling

interests (3)

 

(805)

   

(1,021)

   

(805)

   

(1,021)

 

Adjusted net income (4)

 

$

74,940

   

$

71,121

   

$

230,549

   

$

223,983

 
                         

Diluted earnings per share as reported

 

$

0.57

   

$

0.80

   

$

2.22

   

$

2.47

 

Special items

 

0.37

   

0.06

   

0.64

   

0.22

 

Adjusted diluted earnings per share (4)

 

$

0.94

   

$

0.86

   

$

2.86

   

$

2.69

 
                         

Weighted average shares (diluted)

 

79,725

   

82,707

   

80,702

   

83,314

 

 

(1)

The three and nine months ended September 30, 2014 include a non-cash asset impairment charge of $32.4 million partially offset by net rationalization gains including a gain on the sale of real estate.  The three and nine months ended September 30, 2013 include net charges associated with long-lived asset impairments and 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 nine months ended September 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 nine months ended September 30, 2013 represents the impact of the devaluation of the Venezuelan currency.

(3)

Represents the portion of special items attributable to non-controlling interests.

(4)

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

 

September 30, 2014

 

December 31, 2013

Cash and cash equivalents

 

$

279,523

   

$

299,825

 

Total current assets

 

1,209,836

   

1,130,775

 

Property, plant and equipment, net

 

450,016

   

484,005

 

Total assets

 

2,112,519

   

2,151,867

 

Total current liabilities

 

571,701

   

456,917

 

Short-term debt (1)

 

87,501

   

15,296

 

Long-term debt

 

1,041

   

3,791

 

Total equity

 

1,376,479

   

1,530,688

 
             

Net Operating Working Capital

 

September 30, 2014

 

December 31, 2013

Accounts receivable

 

$

354,376

   

$

367,134

 

Inventory

 

337,197

   

349,963

 

Trade accounts payable

 

186,751

   

212,799

 

Net operating working capital

 

$

504,822

   

$

504,298

 
             

Net operating working capital to net sales (2)

 

17.6

%

 

17.6

%

             

Invested Capital

 

September 30, 2014

 

December 31, 2013

Short-term debt (1)

 

$

87,501

   

$

15,296

 

Long-term debt

 

1,041

   

3,791

 

Total debt

 

88,542

   

19,087

 

Total equity

 

1,376,479

   

1,530,688

 

Invested capital

 

$

1,465,021

   

$

1,549,775

 
             

Total debt / invested capital

 

6.0

%

 

1.2

%

Return on invested capital (3)

 

18.3

%

 

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 September 30,

 
   

2014

   

2013

 

OPERATING ACTIVITIES:

           

Net income

 

$

45,689

   

$

66,044

 

Non-controlling interests in subsidiaries' loss

 

(857)

   

(1,792)

 

Net income including non-controlling interests

 

44,832

   

64,252

 

Adjustments to reconcile Net income including non-controlling interests to Net cash

   provided by operating activities:

           

Rationalization and asset impairment charges

 

28,588

   

4,695

 

Depreciation and amortization

 

17,117

   

17,326

 

Equity earnings in affiliates, net

 

(404)

   

(431)

 

Pension expense

 

4,158

   

7,326

 

Pension contributions and payments

 

(10,479)

   

(3,066)

 

Other non-cash items, net

 

9,382

   

5,421

 

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

           

Decrease in accounts receivable

 

20,953

   

25,385

 

Decrease in inventories

 

6,302

   

2,419

 

Increase (decrease) in trade accounts payable

 

3,915

   

(20,863)

 

Net change in other current assets and liabilities

 

25,919

   

50,006

 

Net change in other long-term assets and liabilities

 

(835)

   

2,570

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

149,448

   

155,040

 
             

INVESTING ACTIVITIES:

           

Capital expenditures

 

(15,483)

   

(28,643)

 

Acquisition of businesses, net of cash acquired

 

   

(260)

 

Proceeds from sale of property, plant and equipment

 

11,537

   

204

 

NET CASH USED BY INVESTING ACTIVITIES

 

(3,946)

   

(28,699)

 
             

FINANCING ACTIVITIES:

           

Net change in borrowings

 

81,257

   

404

 

Proceeds from exercise of stock options

 

1,935

   

2,873

 

Excess tax benefits from stock-based compensation

 

883

   

1,508

 

Purchase of shares for treasury

 

(130,070)

   

(43,964)

 

Cash dividends paid to shareholders

 

(18,276)

   

(16,407)

 

NET CASH USED BY FINANCING ACTIVITIES

 

(64,271)

   

(55,586)

 
             

Effect of exchange rate changes on Cash and cash equivalents

 

(5,993)

   

3,165

 

INCREASE IN CASH AND CASH EQUIVALENTS

 

75,238

   

73,920

 

Cash and cash equivalents at beginning of period

 

204,285

   

256,389

 

Cash and cash equivalents at end of period

 

$

279,523

   

$

330,309

 
             

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

 

 

Condensed Consolidated Statements of Cash Flows

 
   
   

Nine months ended September 30,

 
   

2014

   

2013

 

OPERATING ACTIVITIES:

           

Net income

 

$

179,474

   

$

205,456

 

Non-controlling interests in subsidiaries' loss

 

(929)

   

(1,834)

 

Net income including non-controlling interests

 

178,545

   

203,622

 

Adjustments to reconcile Net income including non-controlling interests to Net cash

   provided by operating activities:

           

Rationalization and asset impairment charges

 

29,447

   

5,049

 

Depreciation and amortization

 

53,017

   

51,881

 

Equity earnings in affiliates, net

 

(1,901)

   

(1,313)

 

Pension expense

 

9,634

   

22,261

 

Pension contributions and payments

 

(34,643)

   

(84,417)

 

Other non-cash items, net

 

30,041

   

29,757

 

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

           

Increase in accounts receivable

 

(22,388)

   

(17,982)

 

Increase in inventories

 

(11,153)

   

(9,889)

 

Decrease in trade accounts payable

 

(11,534)

   

(32,703)

 

Net change in other current assets and liabilities

 

53,299

   

75,627

 

Net change in other long-term assets and liabilities

 

(4,311)

   

198

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

268,053

   

242,091

 
             

INVESTING ACTIVITIES:

           

Capital expenditures

 

(55,430)

   

(59,691)

 

Acquisition of businesses, net of cash acquired

 

(892)

   

(4,936)

 

Proceeds from sale of property, plant and equipment

 

17,046

   

796

 

Other investing activities

 

778

   

(4,217)

 

NET CASH USED BY INVESTING ACTIVITIES

 

(38,498)

   

(68,048)

 
             

FINANCING ACTIVITIES:

           

Net change in borrowings

 

71,114

   

(2,351)

 

Proceeds from exercise of stock options

 

5,945

   

16,077

 

Excess tax benefits from stock-based compensation

 

3,361

   

6,973

 

Purchase of shares for treasury

 

(249,403)

   

(113,641)

 

Cash dividends paid to shareholders

 

(55,395)

   

(32,987)

 

Transactions with non-controlling interests

 

(2,330)

   

(2,809)

 

NET CASH USED BY FINANCING ACTIVITIES

 

(226,708)

   

(128,738)

 
             

Effect of exchange rate changes on Cash and cash equivalents

 

(23,149)

   

(1,460)

 

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(20,302)

   

43,845

 

Cash and cash equivalents at beginning of period

 

299,825

   

286,464

 

Cash and cash equivalents at end of period

 

$

279,523

   

$

330,309

 
             

Cash dividends paid per share

 

$

0.69

   

$

0.40

 

 

 

 

 

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 September 30, 2014

                                     

Net sales

 

$

439,621

   

$

107,507

   

$

57,404

   

$

32,862

   

$

78,383

   

$

   

$

715,777

 

Inter-segment sales

 

30,365

   

4,533

   

3,595

   

9

   

2,009

   

(40,511)

   

 

Total

 

$

469,986

   

$

112,040

   

$

60,999

   

$

32,871

   

$

80,392

   

$

(40,511)

   

$

715,777

 
                                           

EBIT (1)

 

$

84,450

   

$

15,302

   

$

(28,871)

   

$

(1,172)

   

$

8,947

   

$

(324)

   

$

78,332

 

As a percent of total sales

 

18.0

%

 

13.7

%

 

(47.3)

%

 

(3.6)

%

 

11.1

%

       

10.9

%

Special items (gain) charge (2)

 

$

   

$

(81)

   

$

28,567

   

$

582

   

$

   

$

   

$

29,068

 

EBIT, as adjusted (4)

 

$

84,450

   

$

15,221

   

$

(304)

   

$

(590)

   

$

8,947

   

$

(324)

   

$

107,400

 

As a percent of total sales

 

18.0

%

 

13.6

%

 

(0.5)

%

 

(1.8)

%

 

11.1

%

       

15.0

%

Three months ended September 30, 2013

                                     

Net sales

 

$

404,113

   

$

98,522

   

$

63,834

   

$

51,715

   

$

73,691

   

$

   

$

691,875

 

Inter-segment sales

 

35,355

   

5,256

   

3,821

   

151

   

2,311

   

(46,894)

   

 

Total

 

$

439,468

   

$

103,778

   

$

67,655

   

$

51,866

   

$

76,002

   

$

(46,894)

   

$

691,875

 
                                           

EBIT (1)

 

$

75,242

   

$

6,286

   

$

(5,703)

   

$

15,942

   

$

6,917

   

$

(822)

   

$

97,862

 

As a percent of total sales

 

17.1

%

 

6.1

%

 

(8.4)

%

 

30.7

%

 

9.1

%

       

14.1

%

Special items (gain) charge (3)

 

$

(17)

   

$

1,595

   

$

4,724

   

$

   

$

   

$

   

$

6,302

 

EBIT, as adjusted (4)

 

$

75,225

   

$

7,881

   

$

(979)

   

$

15,942

   

$

6,917

   

$

(822)

   

$

104,164

 

As a percent of total sales

 

17.1

%

 

7.6

%

 

(1.4)

%

 

30.7

%

 

9.1

%

       

15.1

%

Nine months ended September 30, 2014

                                     

Net sales

 

$

1,271,017

   

$

328,487

   

$

185,687

   

$

115,906

   

$

228,273

   

$

   

$

2,129,370

 

Inter-segment sales

 

96,668

   

15,887

   

11,644

   

73

   

6,389

   

(130,661)

   

 

Total

 

$

1,367,685

   

$

344,374

   

$

197,331

   

$

115,979

   

$

234,662

   

$

(130,661)

   

$

2,129,370

 
                                           

EBIT (1)

 

$

247,077

   

$

38,489

   

$

(29,029)

   

$

(5,545)

   

$

22,183

   

$

3,167

   

$

276,342

 

As a percent of total sales

 

18.1

%

 

11.2

%

 

(14.7)

%

 

(4.8)

%

 

9.5

%

       

13.0

%

Special items (gain) charge (2)

 

$

(68)

   

$

923

   

$

28,450

   

$

21,715

   

$

   

$

   

$

51,020

 

EBIT, as adjusted (4)

 

$

247,009

   

$

39,412

   

$

(579)

   

$

16,170

   

$

22,183

   

$

3,167

   

$

327,362

 

As a percent of total sales

 

18.1

%

 

11.4

%

 

(0.3)

%

 

13.9

%

 

9.5

%

       

15.4

%

Nine months ended September 30, 2013

                                     

Net sales

 

$

1,242,736

   

$

317,674

   

$

203,112

   

$

132,592

   

$

241,766

   

$

   

$

2,137,880

 

Inter-segment sales

 

99,869

   

13,865

   

12,579

   

222

   

7,209

   

(133,744)

   

 

Total

 

$

1,342,605

   

$

331,539

   

$

215,691

   

$

132,814

   

$

248,975

   

$

(133,744)

   

$

2,137,880

 
                                           

EBIT (1)

 

$

233,553

   

$

26,450

   

$

(3,464)

   

$

19,921

   

$

21,411

   

$

(2,963)

   

$

294,908

 

As a percent of total sales

 

17.4

%

 

8.0

%

 

(1.6)

%

 

15.0

%

 

8.6

%

       

13.8

%

Special items (gain) charge (3)

 

$

1,109

   

$

1,664

   

$

5,431

   

$

12,198

   

$

   

$

   

$

20,402

 

EBIT, as adjusted (4)

 

$

234,662

   

$

28,114

   

$

1,967

   

$

32,119

   

$

21,411

   

$

(2,963)

   

$

315,310

 

As a percent of total sales

 

17.5

%

 

8.5

%

 

0.9

%

 

24.2

%

 

8.6

%

       

14.7

%

 

(1)

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

(2)

Special items in the three and nine months ended September 30, 2014 include non-cash asset impairment charges partially offset by net rationalization gains including a gain on the sale of real estate.  Special items in the nine months ended September 30, 2014 also include 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 nine months ended September 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 September 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

 

$

404,113

   

$

23,208

   

$

9,917

   

$

4,670

   

$

(2,287)

   

$

439,621

 

Europe Welding

 

98,522

   

12,340

   

   

(1,048)

   

(2,307)

   

107,507

 

Asia Pacific Welding

 

63,834

   

(7,000)

   

   

932

   

(362)

   

57,404

 

South America Welding

 

51,715

   

(20,858)

   

   

13,155

   

(11,150)

   

32,862

 

The Harris Products Group

 

73,691

   

5,432

   

   

(709)

   

(31)

   

78,383

 

Consolidated

 

$

691,875

   

$

13,122

   

$

9,917

   

$

17,000

   

$

(16,137)

   

$

715,777

 

% Change

                                   

North America Welding

       

5.7

%

 

2.5

%

 

1.2

%

 

(0.6)

%

 

8.8

%

Europe Welding

       

12.5

%

 

   

(1.1)

%

 

(2.3)

%

 

9.1

%

Asia Pacific Welding

       

(11.0)

%

 

   

1.5

%

 

(0.6)

%

 

(10.1)

%

South America Welding

       

(40.3)

%

 

   

25.4

%

 

(21.6)

%

 

(36.5)

%

The Harris Products Group

       

7.4

%

 

   

(1.0)

%

 

   

6.4

%

Consolidated

       

1.9

%

 

1.4

%

 

2.5

%

 

(2.3)

%

 

3.5

%

                                     
                                     

Nine Months Ended September 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

 

$

1,242,736

   

$

(996)

   

$

26,248

   

$

10,345

   

$

(7,316)

   

$

1,271,017

 

Europe Welding

 

317,674

   

10,263

   

   

(2,810)

   

3,360

   

328,487

 

Asia Pacific Welding

 

203,112

   

(12,650)

   

   

977

   

(5,752)

   

185,687

 

South America Welding

 

132,592

   

(31,654)

   

   

43,565

   

(28,597)

   

115,906

 

The Harris Products Group

 

241,766

   

1,848

   

   

(14,484)

   

(857)

   

228,273

 

Consolidated

 

$

2,137,880

   

$

(33,189)

   

$

26,248

   

$

37,593

   

$

(39,162)

   

$

2,129,370

 

% Change

                                   

North America Welding

       

(0.1)

%

 

2.1

%

 

0.8

%

 

(0.6)

%

 

2.3

%

Europe Welding

       

3.2

%

 

   

(0.9)

%

 

1.1

%

 

3.4

%

Asia Pacific Welding

       

(6.2)

%

 

   

0.5

%

 

(2.8)

%

 

(8.6)

%

South America Welding

       

(23.9)

%

 

   

32.9

%

 

(21.6)

%

 

(12.6)

%

The Harris Products Group

       

0.8

%

 

   

(6.0)

%

 

(0.4)

%

 

(5.6)

%

Consolidated

       

(1.6)

%

 

1.2

%

 

1.8

%

 

(1.8)

%

 

(0.4)

%

 

SOURCE Lincoln Electric Holdings, Inc.

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