Lincoln Electric Reports Fourth Quarter and Full Year 2013 Results Q4 EPS Increases 45% to $1.07, Adjusted EPS Increases 38% to $1.09

Full Year 2013 EPS Increases 16% to $3.54, Adjusted EPS Increases 19% to $3.77

CLEVELAND, Feb. 14, 2014 /PRNewswire/ --

Fourth Quarter and Full Year Highlights vs. Prior Year


  • Q4 Operating income up 39% to $119 million, or 16.6% of sales on a 4% increase in sales
  • Q4 Adjusted operating income up 32% to $120 million and up 350 bps to 16.8% of sales
  • Q4 Net income up 42% to $88 million; Adjusted net income $89 million, including $18 million from Venezuela
  • FY2013 Net income up 14% to $294 million; Adjusted net income $313 million, including $38 million from Venezuela
  • Q4 Cash flow from operations up 15% to $97 million in the fourth quarter; up 4% to $339 million in 2013
  • Returned $71 million to shareholders through share repurchases and dividends in Q4; returned $217 million in 2013

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported fourth quarter 2013 net income of $88.3 million, or $1.07 per diluted share.  Net income was $62.1 million, or $0.74 per diluted share, in the comparable 2012 period.  Adjusted net income was $89.2 million, or $1.09 per diluted share, compared to adjusted net income of $65.9 million, or $0.79 per diluted share, in the comparable 2012 period.

Sales increased 4.4% to $714.8 million in the fourth quarter 2013 versus $684.6 million in the comparable 2012 period.  This increase reflects higher volumes and acquisitions, which was partially offset by unfavorable foreign exchange translation.  Operating income for the fourth quarter increased 38.7% to $118.9 million, or 16.6% of sales, from $85.7 million, or 12.5% of sales, in the comparable 2012 period.  On an adjusted basis, operating income increased 32.1% to $119.9 million or 16.8% of sales, compared with $90.7 million, or 13.3% of sales in 2012.

The Company's Board of Directors declared a quarterly cash dividend of $0.23 per share, which was paid on January 15, 2014 to holders of record on December 31, 2013.  During the quarter, the Company returned $54.2 million to shareholders through the repurchase of 767,531 of the Company's common shares. 

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased to report solid fourth quarter and full year 2013 results that reflect strong execution of our initiatives, even in challenging and dynamic market conditions.  Our focus on favorable mix, optimized processes, and a strong pipeline of new products resulted in margin expansion, solid cash flow generation and accelerated returns to shareholders.  Most notably, we achieved a 120 basis point improvement in working capital efficiency to 17.6% of sales, record cash flows from operations, increased our return on invested capital to 18.9%, and returned over $217 million to shareholders through dividends and share repurchases. 

Looking ahead to 2014, we remain focused on serving our customers with innovative solutions, achieving margin improvements through the continued implementation of our commercial and operational initiatives and expect to benefit from modest end market improvements."

Full Year 2013 Summary

Sales for 2013 were steady at $2.9 billion versus the 2012 period, reflecting a 3.2% increase from acquisitions offset by reduced volumes and unfavorable foreign exchange.  Operating income increased 12.4% to $407.0 million, or 14.3% of sales, from $362.1 million, or 12.7% of sales in 2012.

Net income for 2013 was $293.8 million, or $3.54 per diluted share.  Net income was $257.4 million, or $3.06 per diluted share, in 2012.  Adjusted net income was $313.2 million, or $3.77 per diluted share, compared to adjusted net income of $265.8 million, or $3.16 per diluted share, in 2012. 

During the twelve months ended December 31, 2013, the Company made voluntary contributions of $75.2 million to its U.S. pension plans and returned $217.2 million to shareholders through the payment of $49.3 million in dividends and the repurchase of $167.9 million, or 2,721,903 of the Company's common shares.  The Company also invested $53.2 million in acquisitions during the year.

Venezuela

Venezuela is a highly inflationary economy under U.S. generally accepted accounting principles ("GAAP").  This highly inflationary economy drove higher prices and earnings in our Venezuelan operation during 2013.  In addition, financial results were impacted by an after-tax charge of $12.2 million related to the devaluation of the Venezuelan currency during the first half of 2013.

Fourth quarter 2013 net sales included $40.9 million from Venezuela.  Net income for the quarter included $17.7 million, or $0.22 per diluted share, from Venezuela.  On a full year 2013 basis, net sales included $109.1 million from Venezuela.  Net income for the full year included $25.6 million, or $0.31 per diluted share, from Venezuela.  Adjusted net income for the full year included $37.8 million, or $0.46 per diluted share, from Venezuela.

The impact to earnings of a further devaluation of the Venezuelan currency will be dependent upon movements in the applicable exchange rates and the amount of monetary assets and liabilities on the Venezuelan operation's balance sheet.  The bolivar-denominated monetary net asset position was $38.6 million at December 31, 2013 which includes $50.6 million of cash and cash equivalents translated at the official exchange rate of 6.3 bolivars to the U.S. dollar.  If in the future the Company were to convert bolivars at a rate other than the official exchange rate or the official exchange rate is revised, the Company may realize a loss to earnings.  For example, a future devaluation in the Venezuelan currency to a rate of 12.6 would result in the Company realizing additional charges of approximately $3.0 million to Cost of goods sold based on current inventory levels and $20.0 million to Selling, general and administrative expenses based upon the bolivar-denominated monetary net asset position at December 31, 2013.

The Company expects that the operating environment in Venezuela will continue to be a challenge due to continued economic uncertainty and the limited ability to convert bolivars to U.S. dollars.  The various restrictions on the Company's ability to effectively manage the Venezuelan operations could affect the ability to pay obligations and maintain normal production levels.

Webcast Information

A conference call to discuss fourth quarter 2013 financial results will be webcast live today, Friday, February 14, 2014, 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 and 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 36445529.  A telephonic replay will be available starting at 1:00 p.m. Eastern Time today and will end on Friday, February 28, 2014 at 11:59 p.m. Eastern Time.  To listen to the replay, please dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use confirmation code 36445529.  

Financial results for the fourth quarter 2013 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 http://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company's financial performance from period to period.  Management uses this information in assessing and evaluating the Company's underlying operating performance.  Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.  Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures.

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 and market conditions; the effectiveness of operating initiatives; interest rates; currency exchange rates and devaluations, including in highly inflationary countries such as Venezuela; adverse outcome of pending or potential litigation; actual costs of the Company's rationalization plans; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, on the Company or its customers, suppliers and the economy in general.  For additional discussion, see "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K.






Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)










Consolidated Statements of Income







Three months ended December 31,


Fav (Unfav) to Prior Year



2013


% of Sales


2012


% of Sales


$


%

Net sales


$

714,791



100.0

%


$

684,648



100.0

%


$

30,143



4.4

%

Cost of goods sold


471,744



66.0

%


471,616



68.9

%


(128)




Gross profit


243,047



34.0

%


213,032



31.1

%


30,015



14.1

%

Selling, general & administrative expenses


123,883



17.3

%


122,290



17.9

%


(1,593)



(1.3%)


Rationalization and asset impairment charges


259





5,037



0.7

%


4,778



94.9

%

Operating income


118,905



16.6

%


85,705



12.5

%


33,200



38.7

%

Interest income


868



0.1

%


1,340



0.2

%


(472)



(35.2%)


Equity earnings in affiliates


1,119



0.2

%


743



0.1

%


376



50.6

%

Other income


1,053



0.1

%


670



0.1

%


383



57.2

%

Interest expense


(557)



(0.1%)



(853)



(0.1%)



296



34.7

%

Income before income taxes


121,388



17.0

%


87,605



12.8

%


33,783



38.6

%

Income taxes


33,323



4.7

%


25,639



3.7

%


(7,684)



(30.0%)


Effective tax rate


27.5

%




29.3

%




1.8

%



Net income including non-controlling interests


88,065



12.3

%


61,966



9.1

%


26,099



42.1

%

Non-controlling interests in subsidiaries' loss


(259)





(118)





(141)



(119.5%)


Net income


$

88,324



12.4

%


$

62,084



9.1

%


$

26,240



42.3

%














Basic earnings per share


$

1.09





$

0.75





$

0.34



45.3

%

Diluted earnings per share


$

1.07





$

0.74





$

0.33



44.6

%

Weighted average shares (basic)


81,132





82,651








Weighted average shares (diluted)


82,184





83,677










Twelve months ended December 31,


Fav (Unfav) to Prior Year



2013


% of Sales


2012


% of Sales


$


%

Net sales


$

2,852,671



100.0

%


$

2,853,367



100.0

%


$

(696)




Cost of goods sold


1,910,017



67.0

%


1,986,711



69.6

%


76,694



3.9

%

Gross profit


942,654



33.0

%


866,656



30.4

%


75,998



8.8

%

Selling, general & administrative expenses


527,206



18.5

%


495,221



17.4

%


(31,985)



(6.5%)


Rationalization and asset impairment charges


8,463



0.3

%


9,354



0.3

%


891



9.5

%

Operating income


406,985



14.3

%


362,081



12.7

%


44,904



12.4

%

Interest income


3,320



0.1

%


3,988



0.1

%


(668)



(16.8%)


Equity earnings in affiliates


4,806



0.2

%


5,007



0.2

%


(201)



(4.0%)


Other income


4,194



0.1

%


2,685



0.1

%


1,509



56.2

%

Interest expense


(2,864)



(0.1%)



(4,191)



(0.1%)



1,327



31.7

%

Income before income taxes


416,441



14.6

%


369,570



13.0

%


46,871



12.7

%

Income taxes


124,754



4.4

%


112,354



3.9

%


(12,400)



(11.0%)


Effective tax rate


30.0

%




30.4

%




0.4

%



Net income including non-controlling interests


291,687



10.2

%


257,216



9.0

%


34,471



13.4

%

Non-controlling interests in subsidiaries' loss


(2,093)



(0.1%)



(195)





(1,898)



(973.3%)


Net income


$

293,780



10.3

%


$

257,411



9.0

%


$

36,369



14.1

%














Basic earnings per share


$

3.58





$

3.10





$

0.48



15.5

%

Diluted earnings per share


$

3.54





$

3.06





$

0.48



15.7

%

Weighted average shares (basic)


81,978





83,087








Weighted average shares (diluted)


83,042





84,175








 


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,



2013


2012


2013


2012

Operating income as reported


$

118,905



$

85,705



$

406,985



$

362,081


Special items (pre-tax):









Rationalization and asset impairment charges (1)


259



5,037



8,463



9,354


Loss on the sale of land (2)


705





705




Venezuelan currency devaluation (3)






12,198




Venezuelan statutory severance obligation (4)








1,381


Adjusted operating income (6)


$

119,869



$

90,742



$

428,351



$

372,816











Net income as reported


$

88,324



$

62,084



$

293,780



$

257,411


Special items (after-tax):









Rationalization and asset impairment charges (1)


223



3,823



7,573



7,442


Loss on the sale of land (2)


705





705




Venezuelan currency devaluation (3)






12,198




Venezuelan statutory severance obligation (4)








906


Special items attributable to non-controlling

interests (5)


(47)





(1,068)




Adjusted net income (6)


$

89,205



$

65,907



$

313,188



$

265,759











Diluted earnings per share as reported


$

1.07



$

0.74



$

3.54



$

3.06


Special items


0.02



0.05



0.23



0.10


Adjusted diluted earnings per share (6)


$

1.09



$

0.79



$

3.77



$

3.16











Weighted average shares (diluted)


82,184



83,677



83,042



84,175



(1)  The three and twelve months ended December 31, 2013 include net charges associated with long-lived asset impairments and severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets at rationalized operations.

(2)  Represents the loss realized related to the sale of land.

(3)  Represents the impact of the devaluation of the Venezuelan currency.

(4)  Represents an unfavorable adjustment due to a change in Venezuelan labor law, which provides for increased employee severance obligations.

(5)  The three months ended December 31, 2013 represents the portion of land sale attributable to non-controlling interests. The three and twelve months ended December 31, 2013 include the portion of land sale and the long-lived asset impairments attributable to non-controlling interests.

(6)  Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company's financial performance from period to period. Management uses this information in assessing and evaluating the Company's underlying operating performance. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.


 


Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands)

(Unaudited)


Balance Sheet Highlights



Selected Consolidated Balance Sheet Data


December 31, 2013


December 31, 2012

Cash and cash equivalents


$

299,825



$

286,464


Total current assets


1,130,775



1,132,816


Property, plant and equipment, net


484,005



486,236


Total assets


2,151,867



2,089,863


Total current liabilities


456,779



440,267


Short-term debt (1)


15,296



18,676


Long-term debt


3,791



1,599


Total equity


1,530,688



1,358,321







Net Operating Working Capital


December 31, 2013


December 31, 2012

Accounts receivable


$

367,134



$

360,662


Inventory


349,963



364,890


Trade accounts payable


212,799



209,647


Net operating working capital


$

504,298



$

515,905







Net operating working capital to net sales (2)


17.6

%


18.8

%






Invested Capital


December 31, 2013


December 31, 2012

Short-term debt (1)


$

15,296



$

18,676


Long-term debt


3,791



1,599


Total debt


19,087



20,275


Total equity


1,530,688



1,358,321


Invested capital


$

1,549,775



$

1,378,596







Total debt / invested capital


1.2

%


1.5

%

Return on invested capital (3)


18.9

%


18.7

%


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

(2)  Net operating working capital to net sales is defined as net operating working capital divided by annualized rolling three months of sales.

(3)  Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest 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 December 31,



2013


2012

OPERATING ACTIVITIES:





Net income


$

88,324



$

62,084


Non-controlling interests in subsidiaries' loss


(259)



(118)


Net income including non-controlling interests


88,065



61,966


Adjustments to reconcile Net income including non-controlling interests to Net cash

   provided by operating activities:





Rationalization and asset impairment charges


43



1,383


Depreciation and amortization


17,002



17,114


Equity (earnings) loss in affiliates, net


(347)



1,609


Pension expense


7,513



8,849


Pension contributions and payments


(2,939)



(11,832)


Other non-cash items, net


(296)



3,677


Changes in operating assets and liabilities, net of effects from acquisitions:





Decrease in accounts receivable


12,545



44,009


Decrease in inventories


23,199



35,118


Increase in trade accounts payable


33,497



17,292


Net change in other current assets and liabilities


(80,601)



(61,032)


Net change in other long-term assets and liabilities


(878)



(34,010)


NET CASH PROVIDED BY OPERATING ACTIVITIES


96,803



84,143







INVESTING ACTIVITIES:





Capital expenditures


(16,324)



(13,408)


Acquisition of businesses, net of cash acquired


(48,225)



(81,751)


Proceeds from sale of property, plant and equipment


597



849


Other investing activities


2,500




NET CASH USED BY INVESTING ACTIVITIES


(61,452)



(94,310)







FINANCING ACTIVITIES:





Net change in borrowings


511



(1,302)


Proceeds from exercise of stock options


4,220



6,081


Excess tax benefits from stock-based compensation


3,629



2,225


Purchase of shares for treasury


(54,238)



(20,863)


Cash dividends paid to shareholders


(16,290)



(30,602)


Transactions with non-controlling interests


(3,278)




NET CASH USED BY FINANCING ACTIVITIES


(65,446)



(44,461)







Effect of exchange rate changes on Cash and cash equivalents


(389)



417


DECREASE IN CASH AND CASH EQUIVALENTS


(30,484)



(54,211)


Cash and cash equivalents at beginning of period


330,309



340,675


Cash and cash equivalents at end of period


$

299,825



$

286,464







Cash dividends paid per share


$

0.20



$

0.37











 



Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)


Condensed Consolidated Statements of Cash Flows





Twelve months ended December 31,



2013


2012

OPERATING ACTIVITIES:





Net income


$

293,780



$

257,411


Non-controlling interests in subsidiaries' loss


(2,093)



(195)


Net income including non-controlling interests


291,687



257,216


Adjustments to reconcile Net income including non-controlling interests to Net cash

   provided by operating activities:





Rationalization and asset impairment charges


5,092



1,740


Depreciation and amortization


68,883



65,334


Equity (earnings) loss in affiliates, net


(1,660)



160


Pension expense


29,774



35,439


Pension contributions and payments


(87,356)



(69,646)


Other non-cash items, net


29,461



9,588


Changes in operating assets and liabilities, net of effects from acquisitions:





(Increase) decrease in accounts receivable


(5,437)



57,759


Decrease in inventories


13,310



28,286


Increase in trade accounts payable


794



16,110


Net change in other current assets and liabilities


(4,974)



12,381


Net change in other long-term assets and liabilities


(680)



(86,883)


NET CASH PROVIDED BY OPERATING ACTIVITIES


338,894



327,484







INVESTING ACTIVITIES:





Capital expenditures


(76,015)



(52,715)


Acquisition of businesses, net of cash acquired


(53,161)



(134,602)


Proceeds from sale of property, plant and equipment


1,393



1,387


Other investing activities


(1,717)



(1,541)


NET CASH USED BY INVESTING ACTIVITIES


(129,500)



(187,471)







FINANCING ACTIVITIES:





Net change in borrowings


(1,840)



(89,303)


Proceeds from exercise of stock options


20,297



18,776


Excess tax benefits from stock-based compensation


10,602



7,819


Purchase of shares for treasury


(167,879)



(81,018)


Cash dividends paid to shareholders


(49,277)



(73,112)


Transactions with non-controlling interests


(6,087)




NET CASH USED BY FINANCING ACTIVITIES


(194,184)



(216,838)







Effect of exchange rate changes on Cash and cash equivalents


(1,849)



2,188


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


13,361



(74,637)


Cash and cash equivalents at beginning of period


286,464



361,101


Cash and cash equivalents at end of period


$

299,825



$

286,464







Cash dividends paid per share


$

0.60



$

0.88











 


Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)





North

America

Welding


Europe

Welding


Asia Pacific

Welding


South

America

Welding


The Harris

Products

Group


Corporate /

Eliminations


Consolidated

Three months ended December 31, 2013 

















Net sales


$

410,033



$

111,874



$

63,170



$

63,303



$

66,411



$



$

714,791


Inter-segment sales


27,385



6,046



2,327



11



2,396



(38,165)




Total


$

437,418



$

117,920



$

65,497



$

63,314



$

68,807



$

(38,165)



$

714,791

















EBIT (1)


$

83,902



$

7,752



$

(792)



$

25,187



$

6,415



$

(1,387)



$

121,077


As a percent of total sales


19.2

%


6.6

%


(1.2%)



39.8

%


9.3

%




16.9

%

Special items charge (2)


$

(57)



$

381



$

640



$



$



$



$

964


EBIT, as adjusted (4)


$

83,845



$

8,133



$

(152)



$

25,187



$

6,415



$

(1,387)



$

122,041


As a percent of total sales


19.2

%


6.9

%


(0.2%)



39.8

%


9.3

%




17.1

%

Three months ended December 31, 2012













Net sales


$

392,939



$

107,507



$

70,223



$

39,931



$

74,048



$



$

684,648


Inter-segment sales


29,676



3,870



3,188





1,944



(38,678)




Total


$

422,615



$

111,377



$

73,411



$

39,931



$

75,992



$

(38,678)



$

684,648

















EBIT (1)


$

75,925



$

3,914



$

(5,090)



$

4,829



$

5,544



$

1,996



$

87,118


As a percent of total sales


18.0

%


3.5

%


(6.9%)



12.1

%


7.3

%




12.7

%

Special items charge (3)


$

273



$

1,068



$

3,696



$



$



$



$

5,037


EBIT, as adjusted (4)


$

76,198



$

4,982



$

(1,394)



$

4,829



$

5,544



$

1,996



$

92,155


As a percent of total sales


18.0

%


4.5

%


(1.9%)



12.1

%


7.3

%




13.5

%

Twelve months ended December 31, 2013













Net sales


$

1,652,769



$

429,548



$

266,282



$

195,895



$

308,177



$



$

2,852,671


Inter-segment sales


127,254



19,911



14,906



233



9,605



(171,909)




Total


$

1,780,023



$

449,459



$

281,188



$

196,128



$

317,782



$

(171,909)



$

2,852,671

















EBIT (1)


$

317,455



$

34,202



$

(4,256)



$

45,108



$

27,826



$

(4,350)



$

415,985


As a percent of total sales


17.8

%


7.6

%


(1.5%)



23.0

%


8.8

%




14.6

%

Special items charge (2)


$

1,052



$

2,045



$

6,071



$

12,198



$



$



$

21,366


EBIT, as adjusted (4)


$

318,507



$

36,247



$

1,815



$

57,306



$

27,826



$

(4,350)



$

437,351


As a percent of total sales


17.9

%


8.1

%


0.6

%


29.2

%


8.8

%




15.3

%

Twelve months ended December 31, 2012 













Net sales


$

1,580,818



$

452,227



$

324,482



$

161,483



$

334,357



$



$

2,853,367


Inter-segment sales


131,062



16,048



14,829



38



8,549



(170,526)




Total


$

1,711,880



$

468,275



$

339,311



$

161,521



$

342,906



$

(170,526)



$

2,853,367

















EBIT (1)


$

292,243



$

33,765



$

2,254



$

16,920



$

29,477



$

(4,886)



$

369,773


As a percent of total sales


17.1

%


7.2

%


0.7

%


10.5

%


8.6

%




13.0

%

Special items charge (3)


$

827



$

3,534



$

4,993



$

1,381



$



$



$

10,735


EBIT, as adjusted (4)


$

293,070



$

37,299



$

7,247



$

18,301



$

29,477



$

(4,886)



$

380,508


As a percent of total sales


17.1

%


8.0

%


2.1

%


11.3

%


8.6

%




13.3

%


(1)  EBIT is defined as Operating income plus Equity earnings in affiliates and Other income.

(2)  Special items in the three and twelve months ended December 31, 2013 include net rationalization and asset impairment charges and a loss recognized on the sale of land. The twelve months ended December 31, 2013 special charges also include the impact of the devaluation of the Venezuelan currency.

(3)  Special items in the three and twelve months ended December 31, 2012 include net rationalization and asset impairment charges. The twelve months ended December 31, 2012 special charges also include an unfavorable adjustment due to a change in Venezuelan labor law, which provides for increased employee severance obligations.

(4)  The primary profit measure used by management to assess segment performance is EBIT, as adjusted. EBIT for each operating segment is adjusted for special items to derive EBIT, as adjusted.


 


Lincoln Electric Holdings, Inc.

Change in Net Sales by Segment

(In thousands)

(Unaudited)


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






Change in Net Sales due to:





Net Sales

2012


Volume


Acquisitions


Price


Foreign

Exchange


Net Sales

2013

Operating Segments













North America Welding


$

392,939



$

5,880



$

12,970



$

307



$

(2,063)



$

410,033


Europe Welding


107,507



4,726





(2,774)



2,415



111,874


Asia Pacific Welding


70,223



(3,994)





(974)



(2,085)



63,170


South America Welding


39,931



11,723





13,866



(2,217)



63,303


The Harris Products Group


74,048



3,106





(10,327)



(416)



66,411


Consolidated


$

684,648



$

21,441



$

12,970



$

98



$

(4,366)



$

714,791


% Change













North America Welding




1.5

%


3.3

%


0.1

%


(0.5%)



4.4

%

Europe Welding




4.4

%




(2.6%)



2.2

%


4.1

%

Asia Pacific Welding




(5.7%)





(1.4%)



(3.0%)



(10.0%)


South America Welding




29.4

%




34.7

%


(5.6%)



58.5

%

The Harris Products Group




4.2

%




(13.9%)



(0.6%)



(10.3%)


Consolidated




3.1

%


1.9

%




(0.6%)



4.4

%



















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























Change in Net Sales due to:





Net Sales

2012


Volume


Acquisitions


Price


Foreign

Exchange


Net Sales

2013

Operating Segments













North America Welding


$

1,580,818



$

(22,962)



$

91,442



$

7,785



$

(4,314)



$

1,652,769


Europe Welding


452,227



(18,518)





(5,696)



1,535



429,548


Asia Pacific Welding


324,482



(48,964)





(4,947)



(4,289)



266,282


South America Welding


161,483



13,269





29,730



(8,587)



195,895


The Harris Products Group


334,357



1,276





(24,748)



(2,708)



308,177


Consolidated


$

2,853,367



$

(75,899)



$

91,442



$

2,124



$

(18,363)



$

2,852,671


% Change













North America Welding




(1.5%)



5.8

%


0.5

%


(0.3%)



4.6

%

Europe Welding




(4.1%)





(1.3%)



0.3

%


(5.0%)


Asia Pacific Welding




(15.1%)





(1.5%)



(1.3%)



(17.9%)


South America Welding




8.2

%




18.4

%


(5.3%)



21.3

%

The Harris Products Group




0.4

%




(7.4%)



(0.8%)



(7.8%)


Consolidated




(2.7%)



3.2

%


0.1

%


(0.6%)





 

SOURCE Lincoln Electric Holdings, Inc.



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http://www.lincolnelectric.com

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