Third Quarter 2020 Highlights

• Net sales decline narrows to 8.5% on 8.3% lower organic sales

• Operating income margin of 11.6%; Adjusted operating income margin of 12.6%

• EPS of $0.97; Adjusted EPS of $1.10

• Solid balance sheet profile and strong cash flow generation with 117% cash conversion

• Cost reduction actions now estimated to provide $80 to $85 million of benefits in 2020

CLEVELAND, Oct. 27, 2020 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2020 net income of $58.5 million, or diluted earnings per share (EPS) of $0.97, which includes special item after-tax charges of $7.5 million, or $0.13 EPS. This compares with prior year period net income of $72.5 million, or $1.17 EPS, which included special item after-tax net benefits of $4.8 million, or $0.08 EPS. Excluding these items, third quarter 2020 Adjusted net income was $66.0 million, or $1.10 Adjusted EPS. This compares with Adjusted net income of $67.7 million, or $1.09 Adjusted EPS in the prior year period.

Third quarter 2020 sales decreased 8.5% to $668.9 million from an 8.3% decrease in organic sales and 0.2% unfavorable foreign exchange. Operating income for the third quarter 2020 was $77.8 million, or 11.6% of sales, including $6.3 million in rationalization and asset impairment charges. This compares with operating income of $88.5 million, or 12.1% of sales, in the prior year period. Excluding special items, Adjusted operating income was $84.1 million, or 12.6% of sales, as compared with $91.6 million, or 12.5% of sales, in the prior year period.

“We operated safely while supporting a rebound in demand across all of our regions and reportable segments in the third quarter," stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. “Improved demand and diligent cost management generated solid profitability and earnings performance in the quarter.” Mapes continued, “Looking ahead, we are well-positioned to maximize growth and are focused on increasing profitability and returns to generate long-term value for our shareholders.”

Nine Months 2020 Summary

Net income for the nine months ended September 30, 2020 was $141.0 million, or $2.34 EPS, which includes special item after-tax charges of $33.9 million, or $0.57 EPS. This compares with prior year period net income of $229.4 million, or $3.64 EPS, which included special item after-tax net benefits of $5.8 million, or $0.09 EPS. Excluding these items, Adjusted net income for the nine months ended September 30, 2020 was $174.9 million, or $2.91 Adjusted EPS, compared with Adjusted net income of $223.6 million, or $3.55 Adjusted EPS, in the comparable 2019 period.

Sales decreased 13.5% to $2.0 billion in the nine months ended September 30, 2020 from a 14.3% decrease in organic sales and 0.9% unfavorable foreign exchange, partially offset by a 1.8% benefit from acquisitions. Operating income for the nine months ended September 30, 2020 was $198.6 million, or 10.1% of sales. This compares with operating income of $288.2 million, or 12.7% of sales, in the comparable 2019 period. Excluding special items, Adjusted operating income was $235.5 million, or 12.0% of sales, as compared with $296.3 million, or 13.1% of sales, in the comparable 2019 period.

Dividend

The Company's Board of Directors declared a 4.1% increase in the quarterly cash dividend, from $0.49 per share to $0.51 per share, or $2.04 per share on an annual basis. The declared quarterly cash dividend of $0.51 per share is payable January 15, 2021 to shareholders of record as of December 31, 2020.

Webcast Information

A conference call to discuss third quarter 2020 financial results will be webcast live today, October 27, 2020, 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 3879509. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the third 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 Electric has 59 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. New and changing government actions to address the COVID-19 pandemic continue to occur. As a result, the countries in which the Company’s products are manufactured and distributed are in varying stages of restrictions. Certain jurisdictions may have to re-establish restrictions due to a resurgence in COVID-19 cases. Additionally, although most of the Company’s customers have re-opened and increased operating levels, such customers may be forced to close or limit operations as any new COVID-19 outbreaks occur. Even as government restrictions are lifted and economies reopen, the ultimate shape of the economic recovery is uncertain and may continue to negatively impact the Company's results of operations, cash flows and financial position in subsequent quarters. Given this current 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

		Three Months Ended September 30,														Fav (Unfav) to Prior Year
		2020				% of Sales			2019				% of Sales			$				%
Net sales		$	668,888			100.0	%		$	730,783			100.0	%		$	(61,895	)		(8.5	%)
Cost of goods sold		453,501				67.8	%		492,432				67.4	%		38,931				7.9	%
Gross profit		215,387				32.2	%		238,351				32.6	%		(22,964		)		(9.6	%)
Selling, general & administrative expenses		131,337				19.6	%		148,312				20.3	%		16,975				11.4	%
Rationalization and asset impairment charges		6,257				0.9	%		1,495				0.2	%		(4,762		)		(318.5	%)
Operating income		77,793				11.6	%		88,544				12.1	%		(10,751		)		(12.1	%)
Interest expense, net		5,552				0.8	%		6,400				0.9	%		848				13.3	%
Other income (expense)		1,062				0.2	%		9,653				1.3	%		(8,591		)		(89.0	%)
Income before income taxes		73,303				11.0	%		91,797				12.6	%		(18,494		)		(20.1	%)
Income taxes		14,797				2.2	%		19,340				2.6	%		4,543				23.5	%
Effective tax rate		20.2		%					21.1		%					0.9		%
Net income including non-controlling interests		58,506				8.7	%		72,457				9.9	%		(13,951		)		(19.3	%)
Non-controlling interests in subsidiaries’ income (loss)		27				—			(4		)		—			31				775.0	%
Net income		$	58,479			8.7	%		$	72,461			9.9	%		$	(13,982	)		(19.3	%)
Basic earnings per share		$	0.98						$	1.18						$	(0.20	)		(16.9	%)
Diluted earnings per share		$	0.97						$	1.17						$	(0.20	)		(17.1	%)
Weighted average shares (basic)		59,426							61,380
Weighted average shares (diluted)		60,018							62,061
		Nine Months Ended September 30,														Fav (Unfav) to Prior Year
		2020				% of Sales			2019				% of Sales			$				%
Net sales		$	1,961,606			100.0	%		$	2,266,965			100.0	%		$	(305,359	)		(13.5	%)
Cost of goods sold		1,319,519				67.3	%		1,500,312				66.2	%		180,793				12.1	%
Gross profit		642,087				32.7	%		766,653				33.8	%		(124,566		)		(16.2	%)
Selling, general & administrative expenses		407,440				20.8	%		472,108				20.8	%		64,668				13.7	%
Rationalization and asset impairment charges		36,016				1.8	%		6,337				0.3	%		(29,679		)		(468.3	%)
Operating income		198,631				10.1	%		288,208				12.7	%		(89,577		)		(31.1	%)
Interest expense, net		16,891				0.9	%		17,621				0.8	%		730				4.1	%
Other income (expense)		1,168				0.1	%		17,612				0.8	%		(16,444		)		(93.4	%)
Income before income taxes		182,908				9.3	%		288,199				12.7	%		(105,291		)		(36.5	%)
Income taxes		41,834				2.1	%		58,832				2.6	%		16,998				28.9	%
Effective tax rate		22.9		%					20.4		%					(2.5		%)
Net income including non-controlling interests		141,074				7.2	%		229,367				10.1	%		(88,293		)		(38.5	%)
Non-controlling interests in subsidiaries’ income (loss)		37				—			(26		)		—			63				242.3	%
Net income		$	141,037			7.2	%		$	229,393			10.1	%		$	(88,356	)		(38.5	%)
Basic earnings per share		$	2.36						$	3.68						$	(1.32	)		(35.9	%)
Diluted earnings per share		$	2.34						$	3.64						$	(1.30	)		(35.7	%)
Weighted average shares (basic)		59,655							62,282
Weighted average shares (diluted)		60,202							62,972

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

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data		September 30, 2020				December 31, 2019
Cash and cash equivalents		$	152,479			$	199,563
Total current assets		1,026,211				1,075,581
Property, plant and equipment, net		504,520				529,344
Total assets		2,217,499				2,371,213
Total current liabilities		533,161				563,135
Short-term debt (1)		1,147				34,969
Long-term debt, less current portion		715,687				712,302
Total equity		710,744				819,077
Operating Working Capital		September 30, 2020				December 31, 2019
Accounts receivable, net		$	373,044			$	374,649
Inventories		396,214				393,748
Trade accounts payable		226,494				273,002
Operating working capital		$	542,764			$	495,395
Average operating working capital to Net sales (2)		20.3		%		16.8		%
Invested Capital		September 30, 2020				December 31, 2019
Short-term debt (1)		$	1,147			$	34,969
Long-term debt, less current portion		715,687				712,302
Total debt		716,834				747,271
Total equity		710,744				819,077
Invested capital		$	1,427,578			$	1,566,348
Total debt / invested capital		50.2		%		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 September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Operating income as reported		$	77,793			$	88,544			$	198,631			$	288,208
Special items (pre-tax):
Rationalization and asset impairment charges (2)		6,257				1,495				36,016				6,337
Acquisition transaction and integration costs (3)		—				—				—				1,804
Amortization of step up in value of acquired inventories (4)		—				1,609				806				3,008
Gains on asset disposals (5)		—				—				—				(3,045		)
Adjusted operating income (1)		$	84,050			$	91,648			$	235,453			$	296,312
As a percent of total sales		12.6		%		12.5		%		12.0		%		13.1		%
Net income as reported		$	58,479			$	72,461			$	141,037			$	229,393
Special items:
Rationalization and asset impairment charges (2)		6,257				1,495				36,016				6,337
Acquisition transaction and integration costs (3)		—				—				—				1,804
Pension settlement charges (5)		3,188				—				6,522				—
Amortization of step up in value of acquired inventories (4)		—				1,609				806				3,008
Gains on asset disposals (6)		—				—				—				(3,554		)
Gain on change in control (7)		—				(7,601				—				(7,601		)
Tax effect of Special items (8)		(1,911		)		(255				(9,463		)		(5,819		)
Adjusted net income (1)		66,013				67,709				174,918				223,568
Non-controlling interests in subsidiaries’ income (loss)		27				(4		)		37				(26		)
Interest expense, net		5,552				6,400				16,891				17,621
Income taxes as reported		14,797				19,340				41,834				58,832
Tax effect of Special items (8)		1,911				255				9,463				5,819
Adjusted EBIT (1)		$	88,300			$	93,700			$	243,143			$	305,814
Effective tax rate as reported		20.2		%		21.1		%		22.9		%		20.4		%
Net special item tax impact		—				1.3		%		(0.2		%)		2.0		%
Adjusted effective tax rate (1)		20.2		%		22.4		%		22.7		%		22.4		%
Diluted earnings per share as reported		$	0.97			$	1.17			$	2.34			$	3.64
Special items per share		0.13				(0.08		)		0.57				(0.09		)
Adjusted diluted earnings per share (1)		$	1.10			$	1.09			$	2.91			$	3.55
Weighted average shares (diluted)		60,018				62,061				60,202				62,972

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 nine months ended September 30, 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 September 30,
Return on Invested Capital		2020				2019
Net income as reported		$	204,753			$	316,232
Rationalization and asset impairment charges		44,867				7,269
Acquisition transaction and integration costs		—				2,637
Pension settlement charges		6,522				1,696
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)		(11,030		)		(12,583		)
Adjusted net income (1)		$	245,918			$	307,104
Plus: Interest expense, net of tax of $6,177 and $6,410 in 2020 and 2019, respectively		18,564				19,265
Less: Interest income, net of tax of $513 and $926 in 2020 and 2019, respectively		1,543				2,785
Adjusted net income before tax-effected interest		$	262,939			$	323,584
Invested Capital		September 30, 2020				September 30, 2019
Short-term debt		$	1,147			$	13,293
Long-term debt, less current portion		715,687				713,884
Total debt		716,834				727,177
Total equity		710,744				813,808
Invested capital		$	1,427,578			$	1,540,985
Return on invested capital (1)		18.4		%		21.0		%
		Twelve Months Ended September 30,
Total Debt / EBITDA		2020				2019
Net income as reported		$	204,753			$	316,232
Income taxes		58,412				66,508
Interest expense, net		22,685				21,964
Depreciation and amortization		81,653				78,800
EBITDA (1)		$	367,503			$	483,504
		September 30, 2020				September 30, 2019
Total debt		$	716,834			$	727,177
Total debt / EBITDA		1.95				1.50

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 September 30, 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 September 30,
		2020				2019
OPERATING ACTIVITIES:
Net income		$	58,479			$	72,461
Non-controlling interests in subsidiaries’ income (loss)		27				(4		)
Net income including non-controlling interests		58,506				72,457
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:
Rationalization and asset impairment charges		22				—
Depreciation and amortization		19,488				21,148
Equity earnings in affiliates, net		(80		)		(49		)
Gain on change in control		—				(7,601		)
Other non-cash items, net		2,518				3,566
Changes in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable		(30,517		)		45,374
Decrease (increase) in inventories		26,948				(8,709		)
Decrease in trade accounts payable		(2,218		)		(18,733		)
Net change in other current assets and liabilities		14,232				20,393
Net change in other long-term assets and liabilities		649				835
NET CASH PROVIDED BY OPERATING ACTIVITIES		89,548				128,681
INVESTING ACTIVITIES:
Capital expenditures		(12,105		)		(17,038		)
Acquisition of businesses, net of cash acquired		—				(28,892		)
Proceeds from sale of property, plant and equipment		739				779
NET CASH USED BY INVESTING ACTIVITIES		(11,366		)		(45,151		)
FINANCING ACTIVITIES:
Net change in borrowings		(48,230		)		(27,544		)
Proceeds from exercise of stock options		5,959				5,250
Purchase of shares for treasury		(223		)		(61,028		)
Cash dividends paid to shareholders		(29,131		)		(29,061		)
NET CASH USED BY FINANCING ACTIVITIES		(71,625		)		(112,383		)
Effect of exchange rate changes on Cash and cash equivalents		2,867				(4,396		)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		9,424				(33,249		)
Cash and cash equivalents at beginning of period		143,055				189,861
Cash and cash equivalents at end of period		$	152,479			$	156,612
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

		Nine Months Ended September 30,
		2020				2019
OPERATING ACTIVITIES:
Net income		$	141,037			$	229,393
Non-controlling interests in subsidiaries’ income (loss)		37				(26		)
Net income including non-controlling interests		141,074				229,367
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:
Rationalization and asset impairment net charges		21,927				1,069
Depreciation and amortization		60,566				60,400
Equity earnings in affiliates, net		(323		)		(1,266		)
Gain on change in control		—				(7,601		)
Other non-cash items, net		(2,770		)		9,285
Changes in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable		(6,851		)		24,103
Increase in inventories		(3,430		)		(36,476		)
Decrease in trade accounts payable		(42,333		)		(34,202		)
Net change in other current assets and liabilities		46,642				34,340
Net change in other long-term assets and liabilities		1,059				1,647
NET CASH PROVIDED BY OPERATING ACTIVITIES		215,561				280,666
INVESTING ACTIVITIES:
Capital expenditures		(37,116		)		(53,551		)
Acquisition of businesses, net of cash acquired		—				(136,735		)
Proceeds from sale of property, plant and equipment		6,957				9,491
Other investing activities		—				2,000
NET CASH USED BY INVESTING ACTIVITIES		(30,159		)		(178,795		)
FINANCING ACTIVITIES:
Net change in borrowings		(33,135		)		2,433
Proceeds from exercise of stock options		7,961				6,210
Purchase of shares for treasury		(113,198		)		(221,942		)
Cash dividends paid to shareholders		(88,945		)		(89,162		)
NET CASH USED BY FINANCING ACTIVITIES		(227,317		)		(302,461		)
Effect of exchange rate changes on Cash and cash equivalents		(5,169		)		(1,647		)
DECREASE IN CASH AND CASH EQUIVALENTS		(47,084		)		(202,237		)
Cash and cash equivalents at beginning of period		199,563				358,849
Cash and cash equivalents at end of period		$	152,479			$	156,612
Cash dividends paid per share		$	1.47			$	1.41

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, 2020
Net sales		$	371,535			$	196,937			$	100,416			$	—			$	668,888
Inter-segment sales		29,368				4,898				1,898				(36,164		)		—
Total		$	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) (3)		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		%
Three months ended September 30, 2019
Net sales		$	443,521			$	205,378			$	81,884			$	—			$	730,783
Inter-segment sales		31,101				4,441				1,857				(37,399		)		—
Total		$	474,622			$	209,819			$	83,741			$	(37,399	)		$	730,783
Net income																		$	72,461
As a percent of total sales																		9.9		%
EBIT (1)		$	74,110			$	14,681			$	11,038			$	(1,632	)		$	98,197
As a percent of total sales		15.6		%		7.0		%		13.2		%						13.4		%
Special items charges (gains) (4)		—				(4,497		)		—				—				(4,497		)
Adjusted EBIT (2)		$	74,110			$	10,184			$	11,038			$	(1,632	)		$	93,700
As a percent of total sales		15.6		%		4.9		%		13.2		%						12.8		%

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 charges of $3,856 and $2,401 in Americas Welding and International Welding, respectively, and pension settlement charges of $3,188 in Americas Welding.
4. Special items in 2019 reflect Rationalization and asset impairment charges of $1,495, amortization of step up in value of acquired inventories of $1,609 and a gain on change in control of $7,601 related to the acquisition of Askaynak in International Welding.

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

		Americas Welding					International Welding						The Harris Products Group						Corporate / Eliminations						Consolidated
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		$	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) (3)		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			%
Nine months ended September 30, 2019
Net sales		$	1,377,847				$		635,770				$		253,348				$		—				$		2,266,965
Inter-segment sales		95,300					12,838						5,837						(113,975)						—
Total		$	1,473,147				$		648,608				$		259,185				$		(113,975)				$		2,266,965
Net income																									$		229,393
As a percent of total sales																									10.1			%
EBIT (1)		$	237,598				$		43,624				$		35,045				$		(10,447)				$		305,820
As a percent of total sales		16.1		%			6.7			%			13.5			%									13.5			%
Special items charges (gains) (4)		3,115					(4,925)						—						1,804						(6)
Adjusted EBIT (2)		$	240,713				$		38,699				$		35,045				$		(8,643)				$		305,814
As a percent of total sales		16.3		%			6.0			%			13.5			%									13.5			%

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 charges of $27,719 and $8,297 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 $6,522 in Americas Welding,
4. Special items in 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding and $4,621 in International Welding, 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 and a gain on change in control of $7,601 related to the acquisition of Askaynak in International Welding 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 September 30th Change in Net Sales by Segment
						Change in Net Sales due to:
		Net Sales 2019				Volume				Acquisitions				Price				Foreign Exchange				Net Sales 2020
Operating Segments
Americas Welding		$	443,521			$	(69,028	)		$	—			$	(682	)		$	(2,276	)		$	371,535
International Welding		205,378				(10,964		)		—				70				2,453				196,937
The Harris Products Group		81,884				10,461				—				9,472				(1,401		)		100,416
Consolidated		$	730,783			$	(69,531	)		$	—			$	8,860			$	(1,224	)		$	668,888
% Change
Americas Welding						(15.6		%)		—				(0.2		%)		(0.5		%)		(16.2		%)
International Welding						(5.3		%)		—				—				1.2		%		(4.1		%)
The Harris Products Group						12.8		%		—				11.6		%		(1.7		%)		22.6		%
Consolidated						(9.5		%)		—				1.2		%		(0.2		%)		(8.5		%)
Nine Months Ended September 30th Change in Net Sales by Segment
						Change in Net Sales due to:
		Net Sales 2019				Volume				Acquisitions				Price				Foreign Exchange				Net Sales 2020
Operating Segments
Americas Welding		$	1,377,847			$	(245,755	)		$	6,190			$	(7,479	)		$	(7,504	)		$	1,123,299
International Welding		635,770				(85,923		)		33,521				(2,901		)		(8,440		)		572,027
The Harris Products Group		253,348				6,370				—				10,073				(3,511		)		266,280
Consolidated		$	2,266,965			$	(325,308	)		$	39,711			$	(307	)		$	(19,455	)		$	1,961,606
% Change
Americas Welding		—		%		(17.8		%)		0.4		%		(0.5		%)		(0.5		%)		(18.5		%)
International Welding						(13.5		%)		5.3		%		(0.5		%)		(1.3		%)		(10.0		%)
The Harris Products Group						2.5		%		—				4.0		%		(1.4		%)		5.1		%
Consolidated						(14.3		%)		1.8		%		—				(0.9		%)		(13.5		%)

Contact

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