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Lincoln Electric Reports Third Quarter 2021 Results

Oct 28 2021

Third Quarter 2021 Highlights
  • Net sales increase 20.6% to record $806.5 million on 18.3% higher organic sales
     
  • Operating income margin of 14.3%; Adjusted operating income margin of 15.2%
     
  • EPS decreases 45.4% to $0.53; Adjusted EPS increases 41.8% to record $1.56
     
  • Cash flow from operations increase 23% to $109.9 million
     
  • ROIC increases 440 basis points to 22.8%
     
  • Pension plan termination resulted in pre-tax non-cash charges of $73.6 million

CLEVELAND, Oct. 28, 2021 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2021 net income of $31.8 million, or diluted earnings per share (EPS) of $0.53, which includes special item after-tax charges of $62.0 million, or $1.03 EPS. Special item charges primarily relate to the termination of a pension plan. This compares with prior year period net income of $58.5 million, or $0.97 EPS, which included special item after-tax charges of $7.5 million, or $0.13 EPS. Excluding these items, third quarter 2021 adjusted net income was $93.8 million, or $1.56 Adjusted EPS. This compares with Adjusted net income of $66.0 million, or $1.10 Adjusted EPS in the prior year period.

Third quarter 2021 sales increased 20.6% to $806.5 million from an 18.3% increase in organic sales, 2.0% benefit from acquisitions and 0.3% favorable foreign exchange. Operating income for the third quarter 2021 was $115.6 million, or 14.3% of sales, including special item charges of $7.2 million. This compares with operating income of $77.8 million, or 11.6% of sales, in the prior year period. Excluding special items, adjusted operating income was $122.7 million, or 15.2% of sales, as compared with $84.1 million, or 12.6% of sales, in the prior year period.

“I am pleased to report that strong execution of our 2025 Higher Standard Strategy initiatives delivered record third quarter adjusted earnings performance,” said Christopher L. Mapes, Chairman, President and Chief Executive Officer. “We are serving strong demand and are effectively managing inflationary headwinds and supply chain constraints, which generated solid cash flows, cash conversion and superior returns.”

Pension Plan Termination

During the third quarter 2021, the Company recognized $73.6 million of non-cash pension settlement charges associated with lump sum distributions related to the termination of a pension plan.  In October 2021, the Company entered into an agreement to purchase a group annuity contract with an insurance company to settle the remaining pension obligations of this plan.  The Company estimates fourth quarter 2021 pre-tax settlement charges of approximately $35 - $45 million related to the annuity purchase. The Company anticipates using any surplus assets to fund future contributions into another retirement plan.

Nine Months 2021 Summary

Net income for the nine months ended September 30, 2021 was $202.0 million, or $3.36 EPS. This compares with $141.0 million, or $2.34 EPS, in the comparable 2020 period. Reported EPS includes special item after-tax charges of $75.1 million or $1.25 EPS, as compared with special item after-tax net charges of $33.9 million, or $0.57 EPS in the prior year period. Excluding these items, adjusted net income for the nine months ended September 30, 2021 increased 58.4% to $277.1 million, or $4.61 EPS, compared with $174.9 million, or $2.91 EPS, in the comparable 2020 period.

Sales increased 21.8% to $2.4 billion in the nine months ended September 30, 2021 from a 19.4% increase in organic sales, 1.6% favorable foreign exchange and a 0.9% benefit from acquisitions. Operating income for the nine months ended September 30, 2021 was $341.3 million, or 14.3% of sales. This compares with operating income of $198.6 million, or 10.1% of sales, in the comparable 2020 period. Excluding special items, adjusted operating income was $357.1 million, or 14.9% of sales, as compared with $235.5 million, or 12.0% of sales, in the comparable 2020 period.

Dividend

The Company's Board of Directors declared a 9.8% increase in the quarterly cash dividend, from $0.51 per share to $0.56 per share, or $2.24 per share on an annual basis. The declared quarterly cash dividend of $0.56 per share is payable January 14, 2022 to shareholders of record as of December 31, 2021.

Webcast Information

A conference call to discuss third quarter 2021 financial results will be webcast live today, October 28, 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 8735626. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the third 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 September 30,    Prior Year  
    2021     % of Sales      2020      % of Sales   $   %  
Net sales   $ 806,454       100.0   % $ 668,888   100.0 % $ 137,566     20.6   %
Cost of goods sold     538,282       66.7   %   453,501   67.8 %   (84,781 )   (18.7 ) %
Gross profit     268,172       33.3   %   215,387   32.2 %   52,785     24.5   %
Selling, general & administrative expenses     149,118       18.5   %   131,337   19.6 %   (17,781 )   (13.5 ) %
Rationalization and asset impairment charges     3,484       0.4   %   6,257   0.9 %   2,773     44.3   %
Operating income     115,570       14.3   %   77,793   11.6 %   37,777     48.6   %
Interest expense, net     5,714       0.7   %   5,552   0.8 %   (162 )   (2.9 ) %
Other income (expense)     (71,441 )     (8.9 ) %   1,062   0.2 %   (72,503 )   (6,827.0 ) %
Income before income taxes     38,415       4.8   %   73,303   11.0 %   (34,888 )   (47.6 ) %
Income taxes     6,658       0.8   %   14,797   2.2 %   8,139     55.0   %
Effective tax rate     17.3   %         20.2 %       2.9   %    
Net income including non-controlling interests     31,757       3.9   %   58,506   8.7 %   (26,749 )   (45.7 ) %
Non-controlling interests in subsidiaries’ income (loss)                 27       (27 )   (100.0 ) %
Net income   $ 31,757       3.9   % $ 58,479   8.7 % $ (26,722 )   (45.7 ) %
                                   
Basic earnings per share   $ 0.54           $ 0.98       $ (0.44 )   (44.9 ) %
Diluted earnings per share   $ 0.53           $ 0.97       $ (0.44 )   (45.4 ) %
Weighted average shares (basic)     59,289             59,426                
Weighted average shares (diluted)     60,055             60,018                

 

                                   
                             Fav (Unfav) to  
    Nine Months Ended September 30,    Prior Year  
    2021       % of Sales      2020   % of Sales      $   %  
Net sales   $ 2,389,929       100.0   % $ 1,961,606   100.0 % $ 428,323     21.8   %
Cost of goods sold     1,593,981       66.7   %   1,319,519   67.3 %   (274,462 )   (20.8 ) %
Gross profit     795,948       33.3   %   642,087   32.7 %   153,861     24.0   %
Selling, general & administrative expenses     446,351       18.7   %   407,440   20.8 %   (38,911 )   (9.6 ) %
Rationalization and asset impairment charges     8,277       0.3   %   36,016   1.8 %   27,739     77.0   %
Operating income     341,320       14.3   %   198,631   10.1 %   142,689     71.8   %
Interest expense, net     16,736       0.7   %   16,891   0.9 %   155     0.9   %
Other income (expense)     (71,155 )     (3.0 ) %   1,168   0.1 %   (72,323 )   (6,192.0 ) %
Income before income taxes     253,429       10.6   %   182,908   9.3 %   70,521     38.6   %
Income taxes     51,259       2.1   %   41,834   2.1 %   (9,425 )   (22.5 ) %
Effective tax rate     20.2   %         22.9 %       2.7   %    
Net income including non-controlling interests     202,170       8.5   %   141,074   7.2 %   61,096     43.3   %
Non-controlling interests in subsidiaries’ income (loss)     131             37       94     254.1   %
Net income   $ 202,039       8.5   % $ 141,037   7.2 % $ 61,002     43.3   %
                                   
Basic earnings per share   $ 3.40           $ 2.36       $ 1.04     44.1   %
Diluted earnings per share   $ 3.36           $ 2.34       $ 1.02     43.6   %
Weighted average shares (basic)     59,465             59,655                
Weighted average shares (diluted)     60,168             60,202                


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

Balance Sheet Highlights

               
Selected Consolidated Balance Sheet Data      September 30,
2021
     December 31,
2020
 
Cash and cash equivalents   $ 160,559   $ 257,279  
Accounts receivable, net     443,054     373,487  
Inventories     524,433     381,258  
Total current assets     1,235,958     1,112,343  
Property, plant and equipment, net     520,081     522,092  
Total assets     2,568,797     2,314,453  
Trade accounts payable     309,202     256,530  
Total current liabilities     745,420     549,449  
Short-term debt (1)     41,404     2,734  
Long-term debt, less current portion     717,787     715,456  
Total equity     857,893     790,250  
               
Operating Working Capital   September 30,
2021
  December 31,
2020
 
Average operating working capital to Net sales (2)     18.6 %   17.4 %
               
Invested Capital   September 30,
2021
  December 31, 2020  
Short-term debt (1)   $ 41,404   $ 2,734  
Long-term debt, less current portion     717,787     715,456  
Total debt     759,191     718,190  
Total equity     857,893     790,250  
Invested capital   $ 1,617,084   $ 1,508,440  
               
Total debt / invested capital     46.9 %   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 September 30,      Nine Months Ended September 30,   
    2021     2020       2021     2020    
Operating income as reported   $ 115,570     $ 77,793       $ 341,320     $ 198,631    
Special items (pre-tax):                            
Rationalization and asset impairment charges (2)     3,484       6,257         8,277       36,016    
Acquisition transaction costs (3)                   1,923          
Amortization of step up in value of acquired inventories (4)     3,690               5,531       806    
Adjusted operating income (1)   $ 122,744     $ 84,050       $ 357,051     $ 235,453    
As a percent of total sales     15.2   %   12.6   %     14.9   %   12.0   %
                             
Net income as reported   $ 31,757     $ 58,479       $ 202,039     $ 141,037    
Special items:                            
Rationalization and asset impairment charges (2)     3,484       6,257         8,277       36,016    
Acquisition transaction costs (3)                   1,923          
Pension settlement charges (5)     73,562       3,188         80,098       6,522    
Amortization of step up in value of acquired inventories (4)     3,690               5,531       806    
Tax effect of Special items (6)     (18,743 )     (1,911 )       (20,737 )     (9,463 )  
Adjusted net income (1)     93,750       66,013         277,131       174,918    
Non-controlling interests in subsidiaries’ income (loss)           27         131       37    
Interest expense, net     5,714       5,552         16,736       16,891    
Income taxes as reported     6,658       14,797         51,259       41,834    
Tax effect of Special items (6)     18,743       1,911         20,737       9,463    
Adjusted EBIT (1)   $ 124,865     $ 88,300       $ 365,994     $ 243,143    
                             
Effective tax rate as reported     17.3   %   20.2   %     20.2   %   22.9   %
Net special item tax impact     4.0   %     %     0.4   %   (0.2 ) %
Adjusted effective tax rate (1)     21.3   %   20.2   %     20.6   %   22.7   %
                             
Diluted earnings per share as reported   $ 0.53     $ 0.97       $ 3.36     $ 2.34    
Special items per share     1.03       0.13         1.25       0.57    
Adjusted diluted earnings per share (1)   $ 1.56     $ 1.10       $ 4.61     $ 2.91    
                             
Weighted average shares (diluted)     60,055       60,018         60,168       60,202    
  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 acquisitions and are included in Selling, general & administrative expenses.
  4. Related to acquisitions and are included in Cost of goods sold.
  5. Settlement charges related to lump sum pension payments 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 September 30,   
Return on Invested Capital      2021        2020    
Net income as reported   $ 267,117     $ 204,753    
Rationalization and asset impairment charges     17,729       44,867    
Acquisition transaction costs     1,923          
Pension settlement charges     81,695       6,522    
Amortization of step up in value of acquired inventories     5,531       806    
Tax effect of Special items (2)     (21,868 )     (11,030 )  
Adjusted net income (1)   $ 352,127     $ 245,918    
Plus: Interest expense, net of tax of $5,893 and $6,177 in 2021 and 2020, respectively     17,520       18,564    
Less: Interest income, net of tax of $402 and $513 in 2021 and 2020, respectively     1,193       1,543    
Adjusted net income before tax-effected interest   $ 368,454     $ 262,939    
               
Invested Capital   September 30, 2021   September 30, 2020  
Short-term debt   $ 41,404     $ 1,147    
Long-term debt, less current portion     717,787       715,687    
Total debt     759,191       716,834    
Total equity     857,893       710,744    
Invested capital   $ 1,617,084     $ 1,427,578    
               
Return on invested capital (1)     22.8   %   18.4   %

 

       Twelve Months Ended September 30, 
Total Debt / EBITDA   2021   2020
Net income as reported   $ 267,117     $ 204,753    
Income taxes     67,321       58,412    
Interest expense, net     21,818       22,685    
Depreciation and amortization     80,484       81,653    
EBITDA (1)   $ 436,740     $ 367,503    
                   
      September 30, 2021       September 30, 2020    
Total debt   $ 759,191     $ 716,834    
                   
Total debt / EBITDA     1.74       1.95    
  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 September 30,    
      2021     2020    
OPERATING ACTIVITIES:            
Net income   $ 31,757     $ 58,479    
Non-controlling interests in subsidiaries’ income (loss)           27    
Net income including non-controlling interests     31,757       58,506    
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:            
Rationalization and asset impairment net charges     212       22    
Depreciation and amortization     22,050       19,488    
Equity earnings in affiliates, net     (108 )     (80 )  
Pension settlement charges     73,562       3,188    
Other non-cash items, net     389       (670 )  
Changes in operating assets and liabilities, net of effects from acquisitions:            
Decrease (increase) in accounts receivable     16,359       (30,517 )  
(Increase) decrease in inventories     (45,670 )     26,948    
Decrease in trade accounts payable     (8,294 )     (2,218 )  
Net change in other current assets and liabilities     31,838       14,232    
Net change in other long-term assets and liabilities     (12,204 )     649    
NET CASH PROVIDED BY OPERATING ACTIVITIES     109,891       89,548    
             
INVESTING ACTIVITIES:            
Capital expenditures     (18,672 )     (12,105 )  
Acquisition of businesses, net of cash acquired     (74,882 )        
Proceeds from sale of property, plant and equipment     1,290       739    
NET CASH USED BY INVESTING ACTIVITIES     (92,264 )     (11,366 )  
             
FINANCING ACTIVITIES:            
Net change in borrowings     31,132       (48,230 )  
Proceeds from exercise of stock options     2,249       5,959    
Purchase of shares for treasury     (50,160 )     (223 )  
Cash dividends paid to shareholders     (30,338 )     (29,131 )  
NET CASH USED BY FINANCING ACTIVITIES     (47,117 )     (71,625 )  
             
Effect of exchange rate changes on Cash and cash equivalents     (835 )     2,867    
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (30,325 )     9,424    
Cash and cash equivalents at beginning of period     190,884       143,055    
Cash and cash equivalents at end of period   $ 160,559     $ 152,479    
             
Cash dividends paid per share   $ 0.51     $ 0.49    


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

             
         Nine Months Ended September 30,     
      2021       2020    
OPERATING ACTIVITIES:            
Net income   $ 202,039     $ 141,037    
Non-controlling interests in subsidiaries’ income (loss)     131       37    
Net income including non-controlling interests     202,170       141,074    
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:            
Rationalization and asset impairment net (gains) charges     (1,162 )     21,927    
Depreciation and amortization     60,558       60,566    
Equity earnings in affiliates, net     (399 )     (323 )  
Pension settlement charges     80,098       6,522    
Other non-cash items, net     (10,967 )     (9,292 )  
Changes in operating assets and liabilities, net of effects from acquisitions:            
Increase in accounts receivable     (71,212 )     (6,851 )  
Increase in inventories     (128,856 )     (3,430 )  
Increase (decrease) in trade accounts payable     54,981       (42,333 )  
Net change in other current assets and liabilities     78,959       46,642    
Net change in other long-term assets and liabilities     (9,045 )     1,059    
NET CASH PROVIDED BY OPERATING ACTIVITIES     255,125       215,561    
             
INVESTING ACTIVITIES:            
Capital expenditures     (46,440 )     (37,116 )  
Acquisition of businesses, net of cash acquired     (158,605 )        
Proceeds from sale of property, plant and equipment     3,847       6,957    
Other investing activities     6,500          
NET CASH USED BY INVESTING ACTIVITIES     (194,698 )     (30,159 )  
             
FINANCING ACTIVITIES:            
Net change in borrowings     32,295       (33,135 )  
Proceeds from exercise of stock options     7,921       7,961    
Purchase of shares for treasury     (103,848 )     (113,198 )  
Cash dividends paid to shareholders     (91,717 )     (88,945 )  
Other financing activities     (763 )        
NET CASH USED BY FINANCING ACTIVITIES     (156,112 )     (227,317 )  
             
Effect of exchange rate changes on Cash and cash equivalents     (1,035 )     (5,169 )  
DECREASE IN CASH AND CASH EQUIVALENTS     (96,720 )     (47,084 )  
Cash and cash equivalents at beginning of period     257,279       199,563    
Cash and cash equivalents at end of period   $ 160,559     $ 152,479    
             
Cash dividends paid per share   $ 1.53     $ 1.47    


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

                                   
       Americas      International       The Harris      Corporate /             
    Welding   Welding   Products Group   Eliminations   Consolidated    
Three months ended September 30, 2021                                  
Net sales   $ 461,508   $ 227,165   $ 117,781   $     $ 806,454    
Inter-segment sales     37,480     7,078     1,945     (46,503 )        
Total sales   $ 498,988   $ 234,243   $ 119,726   $ (46,503 )   $ 806,454    
                                   
Net income                           $ 31,757    
As a percent of total sales                             3.9 %  
                                   
EBIT (1)   $ 10,983   $ 22,417   $ 15,433   $ (4,704 )   $ 44,129    
As a percent of total sales     2.2 %   9.6 %   12.9 %         5.5 %  
Special items charges (gains) (3)     73,574     6,615     547           80,736    
Adjusted EBIT (2)   $ 84,557   $ 29,032   $ 15,980   $ (4,704 )   $ 124,865    
As a percent of total sales     16.9 %   12.4 %   13.3 %         15.5 %  
                                   
Three months ended September 30, 2020                                  
Net sales   $ 371,535   $ 196,937   $ 100,416   $     $ 668,888    
Inter-segment sales     29,368     4,898     1,898     (36,164 )        
Total sales   $ 400,903   $ 201,835   $ 102,314   $ (36,164 )   $ 668,888    
                                   
Net income                           $ 58,479    
As a percent of total sales                             8.7 %  
                                   
EBIT (1)   $ 52,076   $ 11,031   $ 17,587   $ (1,839 )   $ 78,855    
As a percent of total sales     13.0 %   5.5 %   17.2 %         11.8 %  
Special items charges (gains) (4)     7,044     2,401               9,445    
Adjusted EBIT (2)   $ 59,120   $ 13,432   $ 17,587   $ (1,839 )   $ 88,300    
As a percent of total sales     14.7 %   6.7 %   17.2 %         13.2 %  
  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 $3,484 primarily in International Welding, pension settlement charges of $73,562 in Americas Welding and amortization of the step up in value of acquired inventories of $3,143 and $547 in International Welding and The Harris Products Group, respectively, related to acquisitions.
  4. Special items in 2020 reflect Rationalization and asset impairment charges of $3,856 and $2,401 in Americas Welding and International Welding, respectively, and pension settlement charges of $3,188 in Americas Welding.


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

                                   
       Americas      International      The Harris      Corporate /             
    Welding   Welding   Products Group   Eliminations   Consolidated    
Nine months ended September 30, 2021                                  
Net sales   $ 1,344,218   $ 702,596   $ 343,115   $     $ 2,389,929    
Inter-segment sales     109,993     18,260     6,376     (134,629 )        
Total sales   $ 1,454,211   $ 720,856   $ 349,491   $ (134,629 )   $ 2,389,929    
                                   
Net income                           $ 202,039    
As a percent of total sales                             8.5 %  
                                   
EBIT (1)   $ 165,644   $ 64,150   $ 52,342   $ (11,971 )   $ 270,165    
As a percent of total sales     11.4 %   8.9 %   15.0 %         11.3 %  
Special items charges (gains) (3)     79,664     13,695     547     1,923       95,829    
Adjusted EBIT (2)   $ 245,308   $ 77,845   $ 52,889   $ (10,048 )   $ 365,994    
As a percent of total sales     16.9 %   10.8 %   15.1 %         15.3 %  
                                   
Nine months ended September 30, 2020                                  
Net sales   $ 1,123,299   $ 572,027   $ 266,280   $     $ 1,961,606    
Inter-segment sales     81,644     13,667     5,376     (100,687 )        
Total sales   $ 1,204,943   $ 585,694   $ 271,656   $ (100,687 )   $ 1,961,606    
                                   
Net income                           $ 141,037    
As a percent of total sales                             7.2 %  
                                   
EBIT (1)   $ 142,283   $ 20,626   $ 41,792   $ (4,902 )   $ 199,799    
As a percent of total sales     11.8 %   3.5 %   15.4 %         10.2 %  
Special items charges (gains) (4)     34,241     9,103               43,344    
Adjusted EBIT (2)   $ 176,524   $ 29,729   $ 41,792   $ (4,902 )   $ 243,143    
As a percent of total sales     14.6 %   5.1 %   15.4 %         12.4 %  
  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 $79,652 and $446 in Americas Welding and International Welding, respectively, Rationalization and asset impairment charges of $8,277 primarily in International Welding, amortization of the step up in value of acquired inventories of $4,984 and $547 in International Welding and The Harris Products Group, respectively, and acquisition transaction costs of $1,923 in Corporate/Eliminations related to acquisitions.
  4. Special items in 2020 reflect Rationalization and asset impairment charges of $27,719 and $8,297 in Americas Welding and International Welding, respectively, amortization of the step up in value of acquired inventories of $806 in International Welding related to an acquisition, and pension settlement charges of $6,522 in Americas Welding.


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                     Foreign   Net Sales  
  2020   Volume   Acquisitions   Price   Exchange   2021  
Operating Segments                                    
Americas Welding $ 371,535   $ 42,341     $   $ 43,957   $ 3,675     $ 461,508  
International Welding   196,937     7,452       3,371     21,205     (1,800 )     227,165  
The Harris Products Group   100,416     (1,287 )     9,880     8,609     163       117,781  
Consolidated $ 668,888   $ 48,506     $ 13,251   $ 73,771   $ 2,038     $ 806,454  
                                     
% Change                                    
Americas Welding         11.4   %       11.8 %   1.0   %   24.2 %
International Welding         3.8   %   1.7 %   10.8 %   (0.9 ) %   15.3 %
The Harris Products Group         (1.3 ) %   9.8 %   8.6 %   0.2   %   17.3 %
Consolidated         7.3   %   2.0 %   11.0 %   0.3   %   20.6 %

Nine Months Ended September 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   $ 1,123,299   $ 128,836   $   $ 80,352   $ 11,731   $ 1,344,218  
International Welding     572,027     63,797     6,956     40,537     19,279     702,596  
The Harris Products Group     266,280     28,775     9,880     38,031     149     343,115  
Consolidated   $ 1,961,606   $ 221,408   $ 16,836   $ 158,920   $ 31,159   $ 2,389,929  
                                       
% Change                                      
Americas Welding           11.5 %       7.2 %   1.0 %   19.7 %
International Welding           11.2 %   1.2 %   7.1 %   3.4 %   22.8 %
The Harris Products Group           10.8 %   3.7 %   14.3 %   0.1 %   28.9 %
Consolidated           11.3 %   0.9 %   8.1 %   1.6 %   21.8 %

 


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