Lincoln Electric Reports Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Lincoln Electric reported fourth quarter 2020 net sales of $693.8 million, down 5.8% year-over-year due to a decline in organic sales and foreign exchange impacts. However, net income rose to $65.1 million, or $1.08 EPS, marking an increase from $63.7 million, or $1.03 EPS, in the prior year. Adjusted EPS also grew by 7.8% to $1.24. Operating income margin improved to 12.0%, with record cash flows from operations of $135.8 million. For the full year, net income was $206.1 million, down from $293.1 million in 2019, but adjusted income demonstrated resilience despite a sales drop of 11.6%.

Positive

• Net income increased to $65.1 million from $63.7 million year-over-year.
• Adjusted EPS grew 7.8% to $1.24.
• Operating income margin improved to 12.0% from 11.2% year-over-year.
• Record cash flows from operations of $135.8 million, representing 152% cash conversion.

Negative

• Net sales declined 5.8% year-over-year to $693.8 million.
• Full-year net income dropped to $206.1 million from $293.1 million.
• Sales for the full year decreased 11.6% to $2.7 billion.

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 31^st 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 31^st 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	)%

 

FAQ

What was Lincoln Electric's net income for Q4 2020?

Lincoln Electric reported a net income of $65.1 million for Q4 2020.

How did Lincoln Electric's EPS change in Q4 2020?

Lincoln Electric's diluted EPS increased by 4.9% to $1.08 in Q4 2020.

What were Lincoln Electric's sales figures for the full year 2020?

Sales for Lincoln Electric decreased by 11.6% to $2.7 billion for the full year 2020.

What was the cash conversion rate for Lincoln Electric in Q4 2020?

Lincoln Electric achieved a cash conversion rate of 152% in Q4 2020.

What strategic goals is Lincoln Electric focused on going forward?

Lincoln Electric is focusing on achieving its long-term Higher Standard 2025 Strategy goals.