Lincoln Electric Reports Fourth Quarter and Full Year 2020 Results

2/12, 1:30 PM (Source: GlobeNewswire)


Fourth Quarter 2020 Highlights
  • Net sales decline 5.8% to $693.8 million on 5.6% lower organic sales
     
  • Operating income margin of 12.0%; Adjusted operating income margin of 13.4%
     
  • EPS increases 4.9% to $1.08; Adjusted EPS increases 7.8% to $1.24
     
  • Record fourth quarter cash flows from operations of $135.8 million with 152% cash conversion

CLEVELAND, Feb. 12, 2021 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2020 net income of $65.1 million, or diluted earnings per share (EPS) of $1.08, which includes special item after-tax charges of $9.9 million, or $0.16 EPS. This compares with prior year period net income of $63.7 million, or $1.03 EPS, which included special item after-tax charges of $7.3 million, or $0.12 EPS. Excluding these items, fourth quarter 2020 Adjusted net income was $75.0 million, or $1.24 Adjusted EPS. This compares with Adjusted net income of $71.0 million, or $1.15 Adjusted EPS in the prior year period.

Fourth quarter 2020 sales decreased 5.8% to $693.8 million from a 5.6% decrease in organic sales and 0.2% unfavorable foreign exchange. Operating income for the fourth quarter 2020 was $83.4 million, or 12.0% of sales, including $9.5 million in rationalization charges. This compares with operating income of $82.7 million, or 11.2% of sales, in the prior year period. Excluding special items, Adjusted operating income was $92.9 million, or 13.4% of sales, as compared with $91.6 million, or 12.4% of sales, in the prior year period.

“I am proud of our organization’s outstanding teamwork during this challenging year as we have been focused on safely serving our customers with improving demand through the fourth quarter," stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. “Strong execution of our strategic initiatives and cost reduction actions generated record cash flows, strong cash conversion performance and earnings growth in the quarter while also delivering record safety and environmental performance.” Mapes continued, “Looking ahead, we are well-positioned to capitalize on growth and increase profitability and returns as we focus on achieving our long-term Higher Standard 2025 Strategy goals and superior long-term value for our stakeholders.”

Twelve Months 2020 Summary

Net income for the twelve months ended December 31, 2020 was $206.1 million, or $3.42 EPS, which includes special item after-tax charges of $43.8 million, or $0.73 EPS. This compares with prior year period net income of $293.1 million, or $4.68 EPS, which included special item after-tax net charges of $1.5 million, or $0.02 EPS. Excluding these items, Adjusted net income for the twelve months ended December 31, 2020 was $249.9 million, or $4.15 Adjusted EPS, compared with Adjusted net income of $294.6 million, or $4.70 Adjusted EPS, in the comparable 2019 period.

Sales decreased 11.6% to $2.7 billion in the twelve months ended December 31, 2020 from a 12.2% decrease in organic sales and 0.7% unfavorable foreign exchange, partially offset by a 1.3% benefit from acquisitions. Operating income for the twelve months ended December 31, 2020 was $282.1 million, or 10.6% of sales. This compares with operating income of $370.9 million, or 12.4% of sales, in the comparable 2019 period. Excluding special items, Adjusted operating income was $328.3 million, or 12.4% of sales, as compared with $387.9 million, or 12.9% of sales, in the comparable 2019 period.

Webcast Information

A conference call to discuss fourth quarter 2020 financial results will be webcast live today, February 12, 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 7190715. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2020 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") outbreak, on the Company or its customers, suppliers and the economy in general.  The Company has experienced the negative impacts of COVID-19 on its markets and operations; however, the ultimate duration and severity on the Company's business remains unknown. Although the Company’s customers have re-opened and increased operating levels, such customers may be forced to close or limit operations should a resurgence of COVID-19 cases occur. Given this continued level of economic and operational uncertainty over the impacts of COVID-19, the ultimate financial impact cannot be reasonably estimated at this time. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.


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

Consolidated Statements of Income

                 
                   Fav (Unfav) to
  Three Months Ended December 31,  Prior Year
  2020  % of Sales    2019    % of Sales $ %
Net sales $693,794   100.0%$736,307 100.0%$(42,513) (5.8)%
Cost of goods sold       464,540   67.0%      495,373 67.3% 30,833  6.2%
Gross profit  229,254   33.0% 240,934 32.7% (11,680) (4.8)%
Selling, general & administrative expenses  136,362   19.7% 149,381 20.3% 13,019  8.7%
Rationalization and asset impairment charges  9,452   1.4% 8,851 1.2% (601) (6.8)%
Operating income  83,440   12.0% 82,702 11.2% 738  0.9%
Interest expense, net  5,082   0.7% 5,794 0.8% 712  12.3%
Other income (expense)  2,774   0.4% 3,386 0.5% (612) (18.1)%
Income before income taxes  81,132   11.7% 80,294 10.9% 838  1.0%
Income taxes  16,062   2.3% 16,578 2.3% 516  3.1%
Effective tax rate  19.8%     20.6%    0.8%   
Net income including non-controlling interests  65,070   9.4% 63,716 8.7% 1,354  2.1%
Non-controlling interests in subsidiaries’ income (loss)  (8)       (8) (100.0)%
Net income $65,078   9.4%$63,716 8.7%$1,362  2.1%
                 
Basic earnings per share $1.09     $1.04   $0.05  4.8%
Diluted earnings per share $1.08     $1.03   $0.05  4.9%
Weighted average shares (basic)  59,567      60,996          
Weighted average shares (diluted)  60,301      61,710         


                
                  Fav (Unfav) to
  Twelve Months Ended December 31, Prior Year
     2020 % of Sales    2019  % of Sales    $ %
Net sales $2,655,400 100.0$3,003,272  100.0$(347,872) (11.6)% 
Cost of goods sold  1,784,059 67.2 1,995,685  66.5 211,626  10.6
Gross profit  871,341 32.8 1,007,587  33.5 (136,246) (13.5)% 
Selling, general & administrative expenses  543,802 20.5 621,489  20.7 77,687  12.5
Rationalization and asset impairment charges  45,468 1.7 15,188  0.5 (30,280) (199.4)% 
Operating income  282,071 10.6 370,910  12.4 (88,839) (24.0)% 
Interest expense, net  21,973 0.8 23,415  0.8 1,442  6.2
Other income (expense)  3,942 0.1 20,998  0.7 (17,056) (81.2)% 
Income before income taxes  264,040 9.9 368,493  12.3 (104,453) (28.3)% 
Income taxes  57,896 2.2 75,410  2.5 17,514  23.2
Effective tax rate  21.9%   20.5%     (1.5)%   
Net income including non-controlling interests  206,144 7.8 293,083  9.8 (86,939) (29.7)% 
Non-controlling interests in subsidiaries’ income (loss)  29   (26)   55  211.5
Net income $206,115 7.8$293,109  9.8$(86,994) (29.7)% 
                
Basic earnings per share $3.46   $4.73    $(1.27) (26.8)% 
Diluted earnings per share $3.42   $4.68    $(1.26) (26.9)% 
Weighted average shares (basic)  59,633    61,960           
Weighted average shares (diluted)  60,248    62,658           



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

Balance Sheet Highlights

        
Selected Consolidated Balance Sheet Data    December 31, 2020    December 31, 2019 
Cash and cash equivalents $257,279 $199,563 
Total current assets  1,112,343  1,075,581 
Property, plant and equipment, net  522,092  529,344 
Total assets  2,314,453  2,371,213 
Total current liabilities  549,449  563,135 
Short-term debt (1)  2,734  34,969 
Long-term debt, less current portion  715,456  712,302 
Total equity  790,250  819,077 
        
Operating Working Capital December 31, 2020 December 31, 2019 
Accounts receivable, net $373,487 $374,649 
Inventories  381,258  393,748 
Trade accounts payable  256,530  273,002 
Operating working capital $498,215 $495,395 
        
Average operating working capital to Net sales (2)  18.0%   16.8%
        
Invested Capital December 31, 2020 December 31, 2019 
Short-term debt (1) $2,734 $34,969 
Long-term debt, less current portion  715,456  712,302 
Total debt  718,190  747,271 
Total equity  790,250  819,077 
Invested capital $1,508,440 $1,566,348 
        
Total debt / invested capital  47.6%   47.7%


(1)Includes current portion of long-term debt.
(2)Average operating working capital to Net sales is defined as operating working capital 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 December 31,    Twelve Months Ended December 31,
  2020 2019
  2020
 2019
Operating income as reported $83,440  $82,702   $282,071  $370,910 
Special items (pre-tax):                 
Rationalization and asset impairment charges (2)  9,452   8,851    45,468   15,188 
Acquisition transaction and integration costs (3)            1,804 
Amortization of step up in value of acquired inventories (4)         806   3,008 
Gains on asset disposals (5)            (3,045)
Adjusted operating income (1) $92,892  $91,553   $328,345  $387,865 
As a percent of total sales  13.4%  12.4%   12.4%  12.9%
              
Net income as reported $65,078  $63,716   $206,115  $293,109 
Special items:                 
Rationalization and asset impairment charges (2)  9,452   8,851    45,468   15,188 
Acquisition transaction and integration costs (3)            1,804 
Pension settlement charges (6)  1,597       8,119    
Amortization of step up in value of acquired inventories (4)         806   3,008 
Gains on asset disposals (5)            (3,554)
Gain on change in control (7)            (7,601)
Tax effect of Special items (8)  (1,131)  (1,567)   (10,594)  (7,386)
Adjusted net income (1)  74,996   71,000    249,914   294,568 
Non-controlling interests in subsidiaries’ income (loss)  (8)      29   (26)
Interest expense, net  5,082   5,794    21,973   23,415 
Income taxes as reported  16,062   16,578    57,896   75,410 
Tax effect of Special items (8)  1,131   1,567    10,594   7,386 
Adjusted EBIT (1) $97,263  $94,939   $340,406  $400,753 
              
Effective tax rate as reported  19.8%  20.6%   21.9%  20.5%
Net special item tax impact  (1.1)%  (0.2)%   (0.4)%  1.4%
Adjusted effective tax rate (1)  18.7%  20.4%   21.5%  21.9%
              
Diluted earnings per share as reported $1.08  $1.03   $3.42  $4.68 
Special items per share  0.16   0.12    0.73   0.02 
Adjusted diluted earnings per share (1) $1.24  $1.15   $4.15  $4.70 
              
Weighted average shares (diluted)  60,301   61,710    60,248   62,658 


(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, asset impairments of long-lived assets and gains or losses on the disposal of assets.
(3)Related to the acquisition of Air Liquide Welding and are included in Selling, general & administrative expenses.
(4)Related to an acquisition and are included in Cost of goods sold.
(5)Primarily included in Cost of goods sold.
(6)Related to lump sum pension payments and are included in Other income (expense).
(7)Related to the acquisition of Askaynak and is included in Other income (expense).
(8)Includes the net tax impact of Special items recorded during the respective periods, including tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended December 31, 2019.
 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 December 31,  
Return on Invested Capital    2020
    2019
 
Net income as reported $206,115  $293,109  
Rationalization and asset impairment charges  45,468   15,188  
Acquisition transaction and integration costs     1,804  
Pension settlement charges  8,119     
Amortization of step up in value of acquired inventories  806   3,008  
Gains on asset disposals     (3,554) 
Gain on change in control     (7,601) 
Tax effect of Special items (2)  (10,594)  (7,386) 
Adjusted net income (1) $249,914  $294,568  
Plus: Interest expense, net of tax of $6,026 and $6,477 in 2020 and 2019, respectively  17,933   19,465  
Less: Interest income, net of tax of $500 and $631 in 2020 and 2019, respectively  1,486   1,896  
Adjusted net income before tax-effected interest $266,361  $312,137  
        
Invested Capital December 31, 2020 December 31, 2019 
Short-term debt $2,734  $34,969  
Long-term debt, less current portion  715,456   712,302  
Total debt  718,190   747,271  
Total equity  790,250   819,077  
Invested capital $1,508,440  $1,566,348  
        
Return on invested capital (1)  17.7%  19.9% 
          
  Twelve Months Ended December 31, 
 
Total Debt / EBITDA 2020 2019 
Net income as reported $206,115  $
293,109  
Income taxes  57,896   75,410  
Interest expense, net  21,973   23,415  
Depreciation and amortization  80,492   81,487  
EBITDA (1) $366,476  $473,421  
          
  December 31, 2020 December 31, 2019  
 
Total debt $
718,190  $
747,271  
          
Total debt / EBITDA  1.96   1.58  
          


(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, including tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended December 31, 2019.
 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 December 31, 
  2020
 2019
OPERATING ACTIVITIES:        
Net income $65,078  $63,716 
Non-controlling interests in subsidiaries’ income (loss)  (8)   
Net income including non-controlling interests  65,070   63,716 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment charges (gains)  (92)  2,431 
Depreciation and amortization  19,926   21,087 
Equity earnings in affiliates, net  (85)  (161)
Other non-cash items, net  5,214   12,203 
Changes in operating assets and liabilities, net of effects from acquisitions:        
Decrease in accounts receivable  10,433   26,291 
Decrease in inventories  26,181   24,453 
Increase in trade accounts payable  24,414   25,863 
Net change in other current assets and liabilities  (9,621)  (51,294)
Net change in other long-term assets and liabilities  (5,639)  (2,070)
NET CASH PROVIDED BY OPERATING ACTIVITIES  135,801   122,519 
       
INVESTING ACTIVITIES:        
Capital expenditures  (22,085)  (16,064)
Acquisition of businesses, net of cash acquired     2,018 
Proceeds from sale of property, plant and equipment  710   18 
Other investing activities  2,321    
NET CASH USED BY INVESTING ACTIVITIES  (19,054)  (14,028)
       
FINANCING ACTIVITIES:        
Net change in borrowings  1,375   21,889 
Proceeds from exercise of stock options  9,231   8,137 
Purchase of shares for treasury  (257)  (70,751)
Cash dividends paid to shareholders  (29,173)  (28,758)
NET CASH USED BY FINANCING ACTIVITIES  (18,824)  (69,483)
       
Effect of exchange rate changes on Cash and cash equivalents  6,877   3,943 
INCREASE IN CASH AND CASH EQUIVALENTS  104,800   42,951 
Cash and cash equivalents at beginning of period  152,479   156,612 
Cash and cash equivalents at end of period $257,279  $199,563 
       
Cash dividends paid per share $0.49  $0.47 


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

Condensed Consolidated Statements of Cash Flows

       
     Year Ended December 31, 
  2020
 2019
OPERATING ACTIVITIES:        
Net income $206,115  $293,109 
Non-controlling interests in subsidiaries’ income (loss)  29   (26)
Net income including non-controlling interests  206,144   293,083 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net charges  21,835   3,500 
Depreciation and amortization  80,492   81,487 
Equity earnings in affiliates, net  (408)  (1,427)
Gain on change in control     (7,601)
Other non-cash items, net  2,444   21,488 
Changes in operating assets and liabilities, net of effects from acquisitions:        
Decrease in accounts receivable  3,582   50,394 
Decrease (increase) in inventories  22,751   (12,023)
Decrease in trade accounts payable  (17,919)  (8,339)
Net change in other current assets and liabilities  37,021   (16,954)
Net change in other long-term assets and liabilities  (4,580)  (423)
NET CASH PROVIDED BY OPERATING ACTIVITIES  351,362   403,185 
       
INVESTING ACTIVITIES:        
Capital expenditures  (59,201)  (69,615)
Acquisition of businesses, net of cash acquired     (134,717)
Proceeds from sale of property, plant and equipment  7,667   9,509 
Other investing activities  2,321   2,000 
NET CASH USED BY INVESTING ACTIVITIES  (49,213)  (192,823)
       
FINANCING ACTIVITIES:        
Net change in borrowings  (31,760)  24,322 
Proceeds from exercise of stock options  17,192   14,347 
Purchase of shares for treasury  (113,455)  (292,693)
Cash dividends paid to shareholders  (118,118)  (117,920)
NET CASH USED BY FINANCING ACTIVITIES  (246,141)  (371,944)
       
Effect of exchange rate changes on Cash and cash equivalents  1,708   2,296 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  57,716   (159,286)
Cash and cash equivalents at beginning of period  199,563   358,849 
Cash and cash equivalents at end of period $257,279  $199,563 
       
Cash dividends paid per share $1.96  $1.88 



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

                 
     Americas    International     The Harris    Corporate /       
  Welding Welding Products Group Eliminations Consolidated 
Three months ended December 31, 2020                     
Net sales $386,571 $214,782 $92,441 $  $693,794 
Inter-segment sales  27,734  4,827  1,658  (34,219)   
Total $414,305 $219,609 $94,099 $(34,219) $693,794 
                 
Net income                $65,078 
As a percent of total sales                 9.4%  
                 
EBIT (1) $68,456 $4,949 $13,362 $(553) $86,214 
As a percent of total sales  16.5%   2.3%   14.2%      12.4%  
Special items charges (gains) (3)  748  10,301       11,049 
Adjusted EBIT (2) $69,204 $15,250 $13,362 $(553) $97,263 
As a percent of total sales  16.7%   6.9%   14.2%      14.0%  
                 
Three months ended December 31, 2019                     
Net sales $437,899 $218,606 $79,802 $  $736,307 
Inter-segment sales  28,042  4,853  1,650  (34,545)   
Total $465,941 $223,459 $81,452 $(34,545) $736,307 
                 
Net income                $63,716 
As a percent of total sales                 8.7%  
                 
EBIT (1) $75,006 $4,501 $8,886 $(2,305) $86,088 
As a percent of total sales  16.1%   2.0%   10.9%      11.7%  
Special items charges (gains) (4)    7,081  1,770     8,851 
Adjusted EBIT (2) $75,006 $11,582 $10,656 $(2,305) $94,939 
As a percent of total sales  16.1%   5.2%   13.1%      12.9%  


(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 2020 reflect Rationalization and asset impairment gains of $849 and charges of $10,301 in Americas Welding and International Welding, respectively and pension settlement charges of $1,597 in Americas Welding.
(4)Special items in 2019 reflect Rationalization and asset impairment charges of $7,081 in International Welding and $1,770 in The Harris Products Group.


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

     Americas    International    The Harris    Corporate /       
  Welding Welding Products Group Eliminations Consolidated 
Year ended December 31, 2020                     
Net sales $1,509,870 $786,809 $358,721 $  $2,655,400 
Inter-segment sales  109,378  18,494  7,034  (134,906)   
Total $1,619,248 $805,303 $365,755 $(134,906) $2,655,400 
                 
Net income                $206,115 
As a percent of total sales                 7.8%  
                 
EBIT (1) $210,739 $25,575 $55,154 $(5,455) $286,013 
As a percent of total sales  13.0%   3.2%   15.1%      10.8%  
Special items charges (gains) (3)  34,989  19,404       54,393 
Adjusted EBIT (2) $245,728 $44,979 $55,154 $(5,455) $340,406 
As a percent of total sales  15.2%   5.6%   15.1%      12.8%
                 
Year ended December 31, 2019                     
Net sales $1,815,746 $854,376 $333,150 $  $3,003,272 
Inter-segment sales  123,342  17,691  7,487  (148,520)   
Total $1,939,088 $872,067 $340,637 $(148,520) $3,003,272 
                 
Net income                $293,109 
As a percent of total sales                 9.8%  
                 
EBIT (1) $312,604 $48,125 $43,931 $(12,752) $391,908 
As a percent of total sales  16.1%   5.5%   12.9%      13.0%
Special items charges (gains) (4)  3,115  2,156  1,770  1,804   8,845 
Adjusted EBIT (2) $315,719 $50,281 $45,701 $(10,948) $400,753 
As a percent of total sales  16.3%   5.8%   13.4%      13.3%


(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 2020 reflect Rationalization and asset impairment net charges of $26,870 and $18,598 in Americas Welding and International Welding, respectively, amortization of step up in value of acquired inventories of $806 in International Welding related to an acquisition, and pension settlement charges of $8,119 in Americas Welding.
(4)Special items in 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding, $11,702 in International Welding and $1,770 in The Harris Products Group, amortization of step up in value of acquired inventories of $1,399 in Americas Welding and $1,609 in International Welding, gains on disposals of assets of $3,554 in International Welding, a gain on change in control of $7,601 related to the acquisition of Askaynak and acquisition transaction and integration costs of $1,804 in Corporate/Eliminations related to the acquisition of Air Liquide Welding


Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)

Three Months Ended December 31st Change in Net Sales by Segment

                  
       Change in Net Sales due to:         
 Net Sales          Foreign Net Sales
 2019 Volume Acquisitions Price Exchange 2020
Operating Segments                       
Americas Welding$437,899 $(54,412) $ $5,164 $(2,080) $386,571 
International Welding 218,606  (7,341)    1,101  2,416   214,782 
The Harris Products Group 79,802  5,872     8,498  (1,731)  92,441 
Consolidated$ 736,307 $ (55,881) $ $ 14,763 $ (1,395) $ 693,794 
                  
% Change                       
Americas Welding    (12.4)%    1.2% (0.5)%  (11.7)%
International Welding    (3.4)%    0.5% 1.1%  (1.7)%
The Harris Products Group    7.4%    10.6% (2.2)%  15.8%
Consolidated     (7.6)%     2.0%  (0.2)%   (5.8)%

Twelve Months Ended December 31st Change in Net Sales by Segment

                    
           Change in Net Sales due to:          
  Net Sales          Foreign Net Sales 
  2019 Volume Acquisitions Price Exchange 2020
 
Operating Segments                         
Americas Welding $1,815,746 $(300,167) $6,190 $(2,315) $(9,584) $1,509,870  
International Welding  854,376  (93,264)  33,521  (1,800)  (6,024)  786,809  
The Harris Products Group  333,150  12,242     18,571   (5,242)  358,721  
Consolidated $ 3,003,272 $ (381,189) $ 39,711 $ 14,456  $ (20,850) $ 2,655,400  
                    
% Change                         
Americas Welding     (16.5)%  0.3% (0.1)%  (0.5)%  (16.8)% 
International Welding     (10.9)%  3.9% (0.2)%  (0.7)%  (7.9)% 
The Harris Products Group     3.7%    5.6%  (1.6)%  7.7 
Consolidated      (12.7)%   1.3%  0.5%   (0.7)%   (11.6)% 


 


Contact

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

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