EPS of $0.89

Third Quarter 2016 Highlights

•  Operating income margin of 14.4%  •  Solid cash flow from operations and cash conversion of net income (1)  •  Returned $107 million to shareholders through dividends and share repurchases

CLEVELAND, Oct. 21, 2016 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq:LECO) today reported third quarter 2016 net income of $60.0 million, or diluted earnings per share (EPS) of $0.89 which includes a $4.0 million, or $0.06 EPS benefit from a discrete income tax item.  This compares with net losses of $60.5 million, or $(0.82) EPS, in the comparable 2015 period due to after-tax special item charges of $126.7 million, or $1.71 EPS.  On an adjusted basis, net income for third quarter 2015 was $66.2 million, or $0.89 EPS.

Third quarter 2016 sales decreased 12.0% to $567.6 million as a 2.1% benefit from acquisitions was offset by 12.8% lower volumes, a 0.7% decrease in price and a 0.6% unfavorable impact from foreign exchange translation.  Excluding Venezuela from prior year results due to the recent deconsolidation of the operation, sales decreased 7.0%, primarily from 7.8% lower volumes. 

Operating income for the third quarter 2016 was $81.8 million, or 14.4% of sales, reflecting favorable mix and lower costs.  This compares with operating losses of $84.0 million in the comparable 2015 period which included special items related to pension settlement charges, Venezuelan currency remeasurement losses and rationalization and impairment charges.  On an adjusted basis, third quarter 2015 operating income was $97.1 million or 15.1% of sales.

“We are pleased to report solid margin performance in the quarter,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. “As we navigate through this challenging portion of the cycle, our year-over-year sales performance continues to improve on easier comparisons and successful commercial initiatives in the equipment product line. While market trends remain mixed, we are focused on cost controls, productivity, and positioning Lincoln Electric for long-term success.”

⁽¹⁾ Cash conversion is defined as Net cash provided by operating activities less Capital expenditures divided by Net income.

Nine Months 2016 Summary

Net income for the nine months ended September 30, 2016 was $145.0 million, or EPS of $2.11, which includes an after-tax special item benefit of $7.2 million, or $0.10 EPS, due to the reversal of an income tax valuation allowance and a $33.3 million charge, or $0.48 EPS, from the deconsolidation of the Venezuelan subsidiary.  This compares with net income of $78.8 million, or EPS of $1.04, in the comparable 2015 period.  Adjusted net income for the nine months ended September 30, 2016 was $171.1 million, or adjusted EPS of $2.49, compared with adjusted net income of $206.4 million, or adjusted EPS of $2.72, in 2015.

Sales decreased 13.1% to $1.7 billion in the nine months ended September 30, 2016 primarily due to unfavorable foreign exchange translation and lower volumes.  This compares with $2.0 billion in sales in the comparable 2015 period.  Excluding Venezuela from prior year results, sales decreased 9.9%, primarily from lower volumes.  Operating income was $205.2 million, or 12.0% of sales, as compared with $103.3 million, or 5.2% of sales, in the comparable 2015 period.  Adjusted operating income was $239.6 million or 14.0% of sales, compared with $285.6 million, or 14.5% of sales in 2015.

Venezuela Deconsolidation

Effective June 30, 2016, the Company deconsolidated the financial results of its Venezuela subsidiary and began reporting its results using the cost method of accounting.  As a result, Venezuela is no longer included in the consolidated financial statements in the current period starting in the third quarter of 2016.  In the third quarter of 2015 Venezuela contributed $34.7 million of Net sales and incurred a $16.8 million loss in Gross profit due to a $22.2 million special item charge in Cost of goods sold related to the remeasurement of the Venezuela currency.  Excluding this charge, Venezuela contributed $5.3 million in Gross profit.

Dividend and Share Repurchases
           
The Company’s Board of Directors declared a 9.4% increase in the quarterly cash dividend, from $0.32 per share to $0.35, or $1.40 per share on an annual basis.  The declared quarterly cash dividend of $0.35 per share is payable January 13, 2017 to shareholders of record as of December 31, 2016.

During the third quarter, the Company returned $107.2 million to shareholders through dividends and the repurchase of 1.4 million of the Company’s common shares.  The Company is maintaining its 2016 share repurchase target of $400 million of the Company’s common shares.

Financing Activities
           
On October 20, 2016, the Company issued Senior Unsecured Notes (the "2016 Notes") in the aggregate principal amount of $350 million through a private placement.  The 2016 Notes have maturities ranging from 12 to 25 years with a weighted average effective interest rate of 3.1% and a weighted average term of 18 years.  The proceeds will be used for general corporate purposes.

Webcast Information

A conference call to discuss third quarter 2016 financial results will be webcast live today, October 21, 2016, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://ir.lincolnelectric.com.  Listeners should go to the web site prior to the call to register, download and install any necessary audio software.  A replay of the webcast will be available on the Company's web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 90839034.  Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the third quarter 2016 can also be obtained at http://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market.  Headquartered in Cleveland, Ohio, Lincoln has 48 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.  For more information about Lincoln Electric and its products and services, visit the Company’s website at www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted diluted earnings per share and Return on invested capital 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.

 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Income		Three Months Ended September 30,														Fav (Unfav) to Prior Year
		2016				% of Sales			2015				% of Sales			$				%
Net sales		$	567,646			100.0	%		$	645,166			100.0	%		$	(77,520	)		(12.0	%)
Cost of goods sold		367,834				64.8	%		446,272				69.2	%		78,438				17.6	%
Gross profit		199,812				35.2	%		198,894				30.8	%		918				0.5	%
Selling, general & administrative expenses		117,983				20.8	%		128,299				19.9	%		10,316				8.0	%
Rationalization and asset impairment charges		—				—			18,285				2.8	%		18,285				100.0	%
Pension settlement charges		—				—			136,331				21.1	%		136,331				100.0	%
Operating income (loss)		81,829				14.4	%		(84,021		)		(13.0	%)		165,850				197.4	%
Interest income		360				0.1	%		692				0.1	%		(332		)		(48.0	%)
Equity earnings in affiliates		619				0.1	%		310				—			309				99.7	%
Other income		1,303				0.2	%		296				—			1,007				340.2	%
Interest expense		(3,815		)		(0.7	%)		(5,803		)		(0.9	%)		1,988				34.3	%
Income (loss) before income taxes		80,296				14.1	%		(88,526		)		(13.7	%)		168,822				190.7	%
Income taxes		20,257				3.6	%		(28,045		)		(4.3	%)		(48,302		)		(172.2	%)
Effective tax rate		25.2		%					31.7		%					6.5		%
Net income (loss) including non-controlling interests		60,039				10.6	%		(60,481		)		(9.4	%)		120,520				199.3	%
Non-controlling interests in subsidiaries’ loss		(10		)		—			(15		)		—			5				33.3	%
Net income (loss)		$	60,049			10.6	%		$	(60,466	)		(9.4	%)		$	120,515			199.3	%
Basic earnings (loss) per share		$	0.90						$	(0.82	)					$	1.72			209.8	%
Diluted earnings (loss) per share		$	0.89						$	(0.82	)					$	1.71			208.5	%
Weighted average shares (basic)		66,477							73,754
Weighted average shares (diluted)		67,182							73,754
		Nine Months Ended September 30,														Fav (Unfav) to Prior Year
		2016				% of Sales			2015				% of Sales			$				%
Net sales		$	1,710,786			100.0	%		$	1,967,806			100.0	%		$	(257,020	)		(13.1	%)
Cost of goods sold		1,118,945				65.4	%		1,322,741				67.2	%		203,796				15.4	%
Gross profit		591,841				34.6	%		645,065				32.8	%		(53,224		)		(8.3	%)
Selling, general & administrative expenses		352,290				20.6	%		385,945				19.6	%		33,655				8.7	%
Rationalization and asset impairment charges		—				—			19,524				1.0	%		19,524				100.0	%
Pension settlement charges		—				—			136,331				6.9	%		136,331				100.0	%
Loss on deconsolidation of Venezuelan subsidiary		34,348				2.0	%		—				—			(34,348		)		(100.0	%)
Operating income (loss)		205,203				12.0	%		103,265				5.2	%		101,938				98.7	%
Interest income		1,225				0.1	%		2,023				0.1	%		(798		)		(39.4	%)
Equity earnings in affiliates		2,084				0.1	%		2,138				0.1	%		(54		)		(2.5	%)
Other income		2,552				0.1	%		3,223				0.2	%		(671		)		(20.8	%)
Interest expense		(11,828		)		(0.7	%)		(12,034		)		(0.6	%)		206				1.7	%
Income (loss) before income taxes		199,236				11.6	%		98,615				5.0	%		100,621				102.0	%
Income taxes		54,264				3.2	%		19,902				1.0	%		(34,362		)		(172.7	%)
Effective tax rate		27.2		%					20.2		%					(7.0		%)
Net income (loss) including non-controlling interests		144,972				8.5	%		78,713				4.0	%		66,259				84.2	%
Non-controlling interests in subsidiaries’ loss		(32		)		—			(73		)		—			41				56.2	%
Net income (loss)		$	145,004			8.5	%		$	78,786			4.0	%		$	66,218			84.0	%
Basic earnings (loss) per share		$	2.13						$	1.05						$	1.08			102.9	%
Diluted earnings (loss) per share		$	2.11						$	1.04						$	1.07			102.9	%
Weighted average shares (basic)		68,081							74,999
Weighted average shares (diluted)		68,784							75,764

 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Balance Sheet Highlights
Selected Consolidated Balance Sheet Data		September 30, 2016				December 31, 2015
Cash and cash equivalents		$	256,928			$		304,183
Total current assets		920,478				935,995
Property, plant and equipment, net		384,817				411,323
Total assets		1,833,821				1,784,171
Total current liabilities		596,059				370,122
Short-term debt (1)		183,827				4,278
Long-term debt, less current portion		359,831				350,347
Total equity		752,917				932,448
Operating Working Capital		September 30, 2016				December 31, 2015
Accounts receivable		$	281,039			$		264,715
Inventory		285,199				275,930
Trade accounts payable		164,783				152,620
Operating working capital		$	401,455			$		388,025
Operating working capital to net sales (2)		17.7		%		17.1			%
Invested Capital		September 30, 2016				December 31, 2015
Short-term debt (1)		$	183,827			$		4,278
Long-term debt, less current portion		359,831				350,347
Total debt		543,658				354,625
Total equity		752,917				932,448
Invested capital		$	1,296,575			$		1,287,073
Total debt / invested capital		41.9		%		27.6			%

(1) Includes current portion of long-term debt.

(2) Operating working capital to net sales is defined as operating working capital 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,
		2016				2015				2016				2015
Operating income (loss) as reported		$	81,829			$	(84,021	)		$	205,203			$	103,265
Special items (pre-tax):
Rationalization and asset impairment charges (1)		—				18,285				—				19,524
Loss on deconsolidation of Venezuelan subsidiary (2)		—				—				34,348				—
Venezuela foreign exchange losses (3)		—				26,506				—				26,506
Pension settlement charges (4)		—				136,331				—				136,331
Adjusted operating income (loss) (6)		$	81,829			$	97,101			$	239,551			$	285,626
As a percent of total sales		14.4		%		15.1		%		14.0		%		14.5		%
Net income (loss) as reported		$	60,049			$	(60,466	)		$	145,004			$	78,786
Special items (after-tax):
Rationalization and asset impairment charges (1)		—				16,832				—				17,732
Loss on deconsolidation of Venezuelan subsidiary (2)		—				—				33,251				—
Venezuela foreign exchange losses (3)		—				26,506				—				26,506
Pension settlement charges (4)		—				83,341				—				83,341
Income tax valuation reversals (5)		—				—				(7,196		)		—
Adjusted net income (6)		$	60,049			$	66,213			$	171,059			$	206,365
Diluted earnings (loss) per share as reported		$	0.89			$	(0.82	)		$	2.11			$	1.04
Special items		—				1.71				0.38				1.68
Adjusted diluted earnings per share (6)		$	0.89			$	0.89			$	2.49			$	2.72
Weighted average shares (diluted)		67,182				74,460				68,784				75,764

	(1	)	The three and nine months ended September 30, 2015 include net charges primarily related to severance and other related costs and charges related to the impairment of long-lived assets and goodwill.
	(2	)	The nine months ended September 30, 2016 reflect a charge (non-cash charge of $34.1 million pretax and $33.0 million after-tax) related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016.
	(3	)	The three and nine months ended September 30, 2015 represent the impact of Venezuelan remeasurement losses related to the adoption of new foreign exchange mechanisms.
	(4	)	The three and nine months ended September 30, 2015 include pension settlement charges primarily related to the purchase of a group annuity contract.
	(5	)	The nine months ended September 30, 2016 reflect reduced income tax expense related to the reversal of an income tax valuation allowance as a result of a legal entity change to realign the Company’s tax structure.
	(6	)	Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share 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 believe 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.

 

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		2016				2015
Net income as reported		$	193,696			$	153,998
Rationalization and asset impairment charges (gains), net of tax of ($16) and $1,791 in 2016 and 2015, respectively		450				17,899
Loss on deconsolidation of Venezuelan subsidiary, net of tax of $1,097		33,251				—
Income tax valuation reversals		(7,196		)		—
Pension settlement charges, net of tax of $2,438 and $52,990 in 2016 and 2015, respectively		3,969				83,341
Venezuela currency devaluation		708				26,506
Adjusted net income (1)		$	224,878			$	281,744
Plus: Interest expense, net of tax of $6,816 and $7,174 in 2016 and 2015, respectively		13,342				11,564
Less: Interest income, net of tax of $596 and $1,015 in 2016 and 2015, respectively		1,182				1,636
Adjusted net income before tax effected interest		$	237,038			$	291,672
Invested Capital		September 30, 2016				September 30, 2015
Short-term debt		$	183,827			$	2,453
Long-term debt, less current portion		359,831				350,899
Total debt		543,658				353,352
Total equity		752,917				1,011,969
Invested capital		$	1,296,575			$	1,365,321
Return on invested capital (1)(2)		18.3		%		21.4		%

	(1	)	Adjusted net income and Return on invested capital 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 believe 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.
	(2	)	Return on invested capital is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by invested capital.

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
			Three Months Ended September 30,
			2016				2015
OPERATING ACTIVITIES:
Net income (loss)			$	60,049			$	(60,466	)
Non-controlling interests in subsidiaries’ loss			(10		)		(15		)
Net income (loss) including non-controlling interests			60,039				(60,481		)
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:
Rationalization and asset impairment charges		—					6,090
Depreciation and amortization		16,263					16,179
Equity (earnings) loss in affiliates, net		(6			)		236
Pension expense and settlement charges		3,216					141,244
Pension contributions and payments		(582			)		(4,416		)
Other non-cash items, net		(1,742			)		(46,517		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in accounts receivable		10,437					28,343
Decrease in inventories		7,819					26,284
Decrease in trade accounts payable		(8,306			)		(3,412		)
Net change in other current assets and liabilities		22,417					3,197
Net change in other long-term assets and liabilities		1,854					(1,381		)
NET CASH PROVIDED BY OPERATING ACTIVITIES			111,409				105,366
INVESTING ACTIVITIES:
Capital expenditures		(14,598			)		(10,970		)
Acquisition of businesses, net of cash acquired		—					(33,882		)
Proceeds from sale of property, plant and equipment		257					752
Other investing activities			—				(2,103		)
NET CASH USED BY INVESTING ACTIVITIES			(14,341		)		(46,203		)
FINANCING ACTIVITIES:
Net change in borrowings		23,989					170,371
Proceeds from exercise of stock options		4,703					564
Excess tax benefits from stock-based compensation		1,892					194
Purchase of shares for treasury		(85,661			)		(139,337		)
Cash dividends paid to shareholders		(21,533			)		(21,694		)
Other financing activities			—				(44		)
NET CASH (USED BY) PROVIDED BY FINANCING ACTIVITIES			(76,610		)		10,054
Effect of exchange rate changes on Cash and cash equivalents			(549		)		(17,609		)
INCREASE IN CASH AND CASH EQUIVALENTS			19,909				51,608
Cash and cash equivalents at beginning of period			237,019				312,737
Cash and cash equivalents at end of period			$	256,928			$	364,345
Cash dividends paid per share			$	0.32			$	0.29

 

 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows		Nine Months Ended September 30,
		2016				2015
OPERATING ACTIVITIES:
Net income		$	145,004			$	78,786
Non-controlling interests in subsidiaries’ loss		(32		)		(73		)
Net income including non-controlling interests		144,972				78,713
Adjustments to reconcile Net income including non-controlling interests to Net cash   provided by operating activities:
Rationalization and asset impairment charges		—				6,120
Loss on deconsolidation of Venezuelan subsidiary		34,348				—
Depreciation and amortization		48,495				47,897
Equity earnings in affiliates, net		(64		)		(252		)
Pension expense and settlement charges		12,472				151,848
Pension contributions and payments		(22,159		)		(52,121		)
Other non-cash items, net		(7,137		)		(52,307		)
Changes in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable		(11,956		)		14,661
(Increase) decrease in inventories		(7,673		)		27,824
Increase (decrease) in trade accounts payable		13,922				(34,629		)
Net change in other current assets and liabilities		30,424				47,032
Net change in other long-term assets and liabilities		1,122				650
NET CASH PROVIDED BY OPERATING ACTIVITIES		236,766				235,436
INVESTING ACTIVITIES:
Capital expenditures		(39,377		)		(40,187		)
Acquisition of businesses, net of cash acquired		(71,567		)		(33,882		)
Proceeds from sale of property, plant and equipment		936				2,173
Other investing activities		(283		)		(79		)
NET CASH USED BY INVESTING ACTIVITIES		(110,291		)		(71,975		)
FINANCING ACTIVITIES:
Net change in borrowings		183,259				314,420
Proceeds from exercise of stock options		10,418				4,600
Excess tax benefits from stock-based compensation		3,414				1,487
Purchase of shares for treasury		(288,594		)		(297,804		)
Cash dividends paid to shareholders		(66,180		)		(65,942		)
Other financing activities		(18,244		)		(8,040		)
NET CASH USED BY FINANCING ACTIVITIES		(175,927		)		(51,279		)
Effect of exchange rate changes on Cash and cash equivalents		2,197				(26,216		)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(47,255		)		85,966
Cash and cash equivalents at beginning of period		304,183				278,379
Cash and cash equivalents at end of period		$	256,928			$	364,345
Cash dividends paid per share		$	0.96			$	0.87

 

 

 

Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)
		Americas Welding				International Welding				The Harris Products Group				Corporate / Eliminations				Consolidated
Three months ended September 30, 2016
Net sales		$	377,520			$	119,564			$	70,562			$	—			$	567,646
Inter-segment sales		22,386				3,688				1,856				(27,930		)		—
Total		$	399,906			$	123,252			$	72,418			$	(27,930	)		$	567,646
EBIT (2)		$	68,285			$	5,796			$	8,757			$	913			$	83,751
As a percent of total sales		17.1		%		4.7		%		12.1		%						14.8		%
Special items charge (3)		—				—				—				—				—
Adjusted EBIT (4)		$	68,285			$	5,796			$	8,757			$	913			$	83,751
As a percent of total sales		17.1		%		4.7		%		12.1		%						14.8		%
Three months ended September 30, 2015
Net sales		$	454,172			$	128,072			$	62,922			$	—			$	645,166
Inter-segment sales		25,571				5,400				2,307				(33,278		)		—
Total		$	479,743			$	133,472			$	65,229			$	(33,278	)		$	645,166
EBIT (2)		$	(83,413	)		$	(5,676	)		$	6,422			$	(748	)		$	(83,415	)
As a percent of total sales		(17.4		%)		(4.3		%)		9.8		%						(12.9		%)
Special items charge (3)		166,178				14,944				—				—				181,122
Adjusted EBIT (4)		$	82,765			$	9,268			$	6,422			$	(748	)		$	97,707
As a percent of total sales		17.3		%		6.9		%		9.8		%						15.1		%
Nine months ended September 30, 2016
Net sales		$	1,124,900			$	376,684			$	209,202			$	—			$	1,710,786
Inter-segment sales		69,673				11,955				6,983				(88,611		)		—
Total		$	1,194,573			$	388,639			$	216,185			$	(88,611	)		$	1,710,786
EBIT (2)		$	194,924			$	21,699			$	25,752			$	(32,536	)		$	209,839
As a percent of total sales		16.3		%		5.6		%		11.9		%						12.3		%
Special items charge (3)		—				—				—				34,348				34,348
Adjusted EBIT (4)		$	194,924			$	21,699			$	25,752			$	1,812			$	244,187
As a percent of total sales		16.3		%		5.6		%		11.9		%						14.3		%
Nine months ended September 30, 2015
Net sales		$	1,354,010			$	409,246			$	204,550			$	—			$	1,967,806
Inter-segment sales		72,496				15,738				7,034				(95,268		)		—
Total		$	1,426,506			$	424,984			$	211,584			$	(95,268	)		$	1,967,806
EBIT (2)		$	71,423			$	15,036			$	22,221			$	(54	)		$	108,626
As a percent of total sales		5.0		%		3.5		%		10.5		%						5.5		%
Special items charge (3)		166,178				16,183				—				—				182,361
Adjusted EBIT (4)		$	237,601			$	31,219			$	22,221			$	(54	)		$	290,987
As a percent of total sales		16.7		%		7.3		%		10.5		%						14.8		%

	(1	)	As previously announced on February 9, 2016, the Company realigned its organizational structure into three operating segments which was effective beginning in the first quarter of 2016.
	(2	)	EBIT is defined as Operating income plus Equity earnings in affiliates and Other income.
	(3	)	Special items within Corporate/Elimination reflect a charge ($34.1 million non-cash) related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016.  Refer to 'Non-GAAP Financial Measures' for detail on excluded special items.
	(4	)	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.

 

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 2015				Volume				Acquisitions											Price										Foreign Exchange														Net Sales 2016
Operating Segments
Americas Welding			$	454,172			$	(81,338	)					$			12,300							$		(5,645		)						$		(1,969		)						$			377,520
International Welding			128,072				(6,322		)					1,454										(1,255				)						(2,385				)						119,564
The Harris Products Group			62,922				5,235							—										2,226										179										70,562
Consolidated			$	645,166			$	(82,425	)					$	13,754									$		(4,674		)						$		(4,175		)						$			567,646
Americas Welding (excluding Venezuela)			$	419,483			$	(46,648	)					$			12,300							$		(5,646		)						$		(1,969		)						$			377,520
Consolidated (excluding Venezuela)			$	610,476			$	(47,734	)					$			13,754							$		(4,674		)						$		(4,176		)						$			567,646
% Change
Americas Welding							(17.9		%)					2.7				%						(1.2				%)						(0.4				%)						(16.9					%)
International Welding							(4.9		%)					1.1				%						(1.0				%)						(1.9				%)						(6.6					%)
The Harris Products Group							8.3		%					—										3.5				%						0.3				%						12.1					%
Consolidated							(12.8		%)					2.1				%						(0.7				%)						(0.6				%)						(12.0					%)
Americas Welding (excluding Venezuela)							(11.1		%)				2.9						%						(1.3			%)							(0.5			%)							(10.0				%)
Consolidated (excluding Venezuela)							(7.8		%)				2.3						%						(0.8			%)							(0.7			%)							(7.0				%)
Nine Months Ended September 30th Change in Net Sales by Segment
							Change in Net Sales due to:
			Net Sales 2015				Volume				Acquisitions											Price										Foreign Exchange										Net Sales 2016
Operating Segments
Americas Welding			$	1,354,010			$	(226,400	)				$			35,600									$		268,381								$		(306,691		)						$			1,124,900
International Welding			409,246				(21,256		)				8,622												(8,243				)						(11,685				)						$			376,684
The Harris Products Group			204,550				7,361						—												(987				)						(1,722				)						$			209,202
Consolidated			$	1,967,806			$	(240,295	)				$			44,222									$		259,151								$		(320,098		)						$			1,710,786
Americas Welding (excluding Venezuela)			$	1,273,090			$	(172,465	)				$			35,600									$		(7,698		)						$		(14,441		)						$			1,114,086
Consolidated (excluding Venezuela)			$	1,886,886			$	(186,360	)				$			44,222									$		(16,927		)						$		(27,848		)						$			1,699,973
% Change
Americas Welding							(16.7		%)				2.6						%						19.8				%						(22.7				%)						(16.9					%)
International Welding							(5.2		%)				2.1						%						(2.0				%)						(2.9				%)						(8.0					%)
The Harris Products Group							3.6		%				—												(0.5				%)						(0.8				%)						2.3					%
Consolidated							(12.2		%)				2.2						%						13.2				%						(16.3				%)						(13.1					%)
Americas Welding (excluding Venezuela)							(13.5		%)				2.8						%						(0.6				%)						(1.1				%)						(12.5					%)
Consolidated (excluding Venezuela)							(9.9		%)				2.3						%						(0.9				%)						(1.5				%)						(9.9					%)

Contact

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

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