• Lincoln Electric Reports Third Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 28 Oct 2021 06:30:01   America/Chicago


    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

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