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

14 Feb, 2014, 07:30 ET from Lincoln Electric Holdings, Inc.

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.



RELATED LINKS

http://www.lincolnelectric.com