Lincoln Electric Reports Third Quarter 2015 Results

Adjusted EPS of $0.89

Oct 30, 2015, 07:30 ET from Lincoln Electric Holdings, Inc.

CLEVELAND, Oct. 30, 2015 /PRNewswire/ -- 

Third Quarter 2015 Key Metric Highlights

· Adjusted operating income margin increased 40 basis points to 15.1%

· Reported results include $181 million of pre-tax special charges, $127 million after-tax, or $1.71 per diluted share


Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported third quarter 2015 net losses of $60.5 million, or $0.82 per diluted share, which includes the impact of $126.7 million of after-tax special item charges, or $1.71 per diluted share.  This compares with net income of $45.7 million, or earnings per share (EPS) of $0.57 in the comparable 2014 period.  Excluding these items, third quarter 2015 Adjusted net income was $66.2 million, or Adjusted EPS of $0.89.  Third quarter 2014 Adjusted net income was $74.9 million, or Adjusted EPS of $0.94.

Sales decreased $70.6 million to $645.2 million in the third quarter 2015 as favorable price and acquisitions were offset by lower volumes and unfavorable foreign currency translation.  Operating losses for the third quarter 2015 were $84.0 million compared with earnings of $76.1 million, or 10.6% of sales, in the comparable 2014 period.  Adjusted operating income was $97.1 million, or 15.1% of sales.  This compares with $105.2 million, or 14.7% of sales in 2014.

Third quarter 2015 Adjusted operating income excludes the following pre-tax charges: a $136.3 million non-cash charge primarily related to a previously announced pension annuity contract purchase, a $26.5 million non-cash charge related to a Venezuelan currency remeasurement loss and $18.3 million ($6.1 million non-cash) of rationalization and asset impairment charges primarily related to our ongoing efforts to align our business to current market conditions.

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We improved profit margin performance on an adjusted basis in weakening market conditions and against difficult year-over-year comparisons.  Further to the cost reductions initiated in the second quarter, we implemented additional measures that in aggregate now provide approximately $20 million to $25 million in annualized temporary cost savings and $10 million to $12 million in annualized structural savings.  Looking ahead, we will continue to execute on our '2020 Vision and Strategy' and manage margin performance through aggressive cost reduction actions in a slowing demand environment.  We expect these actions will ensure the organization is well positioned to capitalize on profitable growth when conditions improve."

Dividend and Share Repurchases

The Company's Board of Directors declared a 10.3% increase in the quarterly cash dividend, from $0.29 per share to $0.32, or $1.28 per share on an annual basis.  The declared quarterly cash dividend of $0.32 per share is payable January 15, 2016 to shareholders of record as of December 31, 2015. 

During the quarter, the Company returned $161.0 million to shareholders through dividends and the repurchase of 2.4 million of the Company's common shares.  Through the first nine months of 2015, the Company returned $363.7 million to shareholders through dividends and the repurchase of 4.7 million of the Company's common shares.  The Company is maintaining its 2015 share repurchase target of $400 million of the Company's common shares.  

Venezuela Update

The Company is now utilizing the SIMADI rate as of September 30, 2015 for remeasurement purposes, as it believes that this rate more appropriately approximates the rates used to transact business in its Venezuelan operations.  Fourth quarter 2015 Venezuela results will be presented using the SIMADI rate.  The SIMADI rate is an auction-based exchange rate, which was 199.4 bolivars to the U.S. dollar as of September 30, 2015, compared to the SICAD I rate exchange rate, which was 13.5 bolivars to the U.S. dollar on that date. 

As a result of this change, the Company incurred a pre-tax and after-tax charge of $26.5 million in the third quarter of 2015.  This represents a lower of cost or market inventory adjustment of $22.2 million recorded in costs of goods sold and a remeasurement loss of $4.3 million recorded in selling general and administrative expenses.  Third quarter 2015 Venezuela financial performance included Net sales of $34.7 million and Adjusted net income of $0.2 million.  Third quarter 2014 Venezuela financial performance included Net sales of $12.8 million and Adjusted net loss of $1.2 million

The results of our Venezuelan operations could be negatively impacted by additional currency remeasurements or devaluations, increased costs due to changes in raw material sourcing, the potential inability to obtain required production materials resulting in interruptions to operations or other actions by the Venezuelan government that could limit or cause cessation of operations.

Nine Months 2015 Summary

Net income for the nine months ended September 30, 2015 was $78.8 million, or EPS of $1.04, which includes the impact of $127.6 million of after-tax charges, or $1.68 per diluted share.  This compares with net income of $179.5 million, or EPS of $2.22, in 2014.  Adjusted net income for the nine months ended September 30, 2015 was $206.4 million, or Adjusted EPS of $2.72, compared with Adjusted net income of $230.5 million, or Adjusted EPS of $2.86, in 2014. 

Sales decreased 7.6% to $2.0 billion in the nine months ended September 30, 2015 as favorable price and acquisitions were offset by lower volumes and unfavorable foreign currency translation.  Operating income for the nine months ended September 30, 2015 decreased to $103.3 million, or 5.2% of sales, compared with $268.8 million, or 12.6% of sales, in the comparable 2014 period.  Adjusted operating income was $285.6 million or 14.5% of sales, compared with $319.9 million, or 15.0% of sales in 2014 which includes a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.

Webcast Information

A conference call to discuss third quarter 2015 financial results will be webcast live today, October 30, 2015, 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 53335548.  Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the third quarter 2015 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 47 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; 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, 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 for the year ended December 31, 2014.

 

 

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

2015

% of Sales

2014

% of Sales

$

%

Net sales

$

645,166

100.0

%

$

715,777

100.0

%

$

(70,611)

(9.9%)

Cost of goods sold

446,272

69.2

%

474,168

66.2

%

27,896

5.9

%

Gross profit

198,894

30.8

%

241,609

33.8

%

(42,715)

(17.7%)

Selling, general & administrative expenses

128,299

19.9

%

136,424

19.1

%

8,125

6.0

%

Rationalization and asset impairment charges

18,285

2.8

%

29,068

4.1

%

10,783

37.1

%

Pension settlement charges

136,331

21.1

%

(136,331)

(100.0%)

Operating income (loss)

(84,021)

(13.0%)

76,117

10.6

%

(160,138)

(210.4%)

Interest income

692

0.1

%

627

0.1

%

65

10.4

%

Equity earnings in affiliates

310

1,172

0.2

%

(862)

(73.5%)

Other income

296

1,043

0.1

%

(747)

(71.6%)

Interest expense

(5,803)

(0.9%)

(1,174)

(0.2%)

(4,629)

(394.3%)

Income (loss) before income taxes

(88,526)

(13.7%)

77,785

10.9

%

(166,311)

(213.8%)

Income taxes

(28,045)

(4.3%)

32,953

4.6

%

60,998

185.1

%

Effective tax rate

31.7

%

42.4

%

10.7

%

Net income (loss) including non-controlling interests

(60,481)

(9.4%)

44,832

6.3

%

(105,313)

(234.9%)

Non-controlling interests in subsidiaries' loss

(15)

(857)

(0.1%)

842

98.2

%

Net income (loss)

$

(60,466)

(9.4%)

$

45,689

6.4

%

$

(106,155)

(232.3%)

Basic earnings (loss) per share

$

(0.82)

$

0.58

$

(1.40)

(241.4%)

Diluted earnings (loss) per share

$

(0.82)

$

0.57

$

(1.39)

(243.9%)

Weighted average shares (basic)

73,754

78,817

Weighted average shares (diluted)

73,754

79,725

Nine months ended September 30,

Fav (Unfav) to Prior Year

2015

% of Sales

2014

% of Sales

$

%

Net sales

$

1,967,806

100.0

%

$

2,129,370

100.0

%

$

(161,564)

(7.6%)

Cost of goods sold

1,322,741

67.2

%

1,411,158

66.3

%

88,417

6.3

%

Gross profit

645,065

32.8

%

718,212

33.7

%

(73,147)

(10.2%)

Selling, general & administrative expenses

385,945

19.6

%

419,495

19.7

%

33,550

8.0

%

Rationalization and asset impairment charges

19,524

1.0

%

29,887

1.4

%

10,363

(34.7%)

Pension Settlement Charges

136,331

6.9

%

(136,331)

(100.0%)

Operating income (loss)

103,265

5.2

%

268,830

12.6

%

(165,565)

(61.6%)

Interest income

2,023

0.1

%

2,465

0.1

%

(442)

(17.9%)

Equity earnings in affiliates

2,138

0.1

%

4,308

0.2

%

(2,170)

(50.4%)

Other income

3,223

0.2

%

3,204

0.2

%

19

0.6

%

Interest expense

(12,034)

(0.6%)

(3,730)

(0.2%)

(8,304)

(222.6%)

Income (loss)  before income taxes

98,615

5.0

%

275,077

12.9

%

(176,462)

(64.2%)

Income taxes

19,902

1.0

%

96,532

4.5

%

76,630

79.4

%

Effective tax rate

20.2

%

35.1

%

14.9

%

Net income (loss) including non-controlling interests

78,713

4.0

%

178,545

8.4

%

(99,832)

(55.9%)

Non-controlling interests in subsidiaries' loss

(73)

(929)

856

92.1

%

Net income (loss)

$

78,786

4.0

%

$

179,474

8.4

%

$

(100,688)

(56.1%)

Basic earnings (loss) per share

$

1.05

$

2.25

$

(1.20)

(53.3%)

Diluted earnings (loss) per share

$

1.04

$

2.22

$

(1.18)

(53.2%)

Weighted average shares (basic)

74,999

79,779

Weighted average shares (diluted)

75,764

80,702

 

 

 

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,

2015

2014

2015

2014

Operating income (loss) as reported

(84,021)

76,117

103,265

268,830

Special items (pre-tax):

Rationalization and asset impairment charges (1)

18,285

29,068

19,524

29,887

Venezuela foreign exchange losses (2)

26,506

26,506

21,133

Pension settlement charges (3)

136,331

136,331

Adjusted operating income (loss) (5)

$

97,101

$

105,185

$

285,626

$

319,850

Net income (loss) as reported

$

(60,466)

$

45,689

$

78,786

$

179,474

Special items (after-tax):

Rationalization and asset impairment charges (1)

16,832

30,056

17,732

30,747

Venezuela foreign exchange losses (2)

26,506

26,506

21,133

Pension settlement charges (3)

83,341

83,341

Special items attributable to non-controlling

Interests

(805)

(805)

Adjusted net income (loss) (5)

$

66,213

$

74,940

$

206,365

$

230,549

Diluted earnings (loss) per share as reported

$

(0.82)

$

0.57

$

1.04

$

2.22

Special items (4)

1.71

0.37

1.68

0.64

Adjusted diluted earnings per share (4)(5)

$

0.89

$

0.94

$

2.72

$

2.86

Weighted average shares (diluted) (4)

74,460

79,725

75,764

80,702

 

(1)

The three and nine months ended September 30, 2015 and 2014 include net charges primarily related to severance and other related costs and long-lived asset impairments.  The three and nine months ended September 30, 2015 also include a goodwill asset impairment charge.  Rationalization charges in 2014 are partially offset by gains related to the sale of assets at rationalized operations.

(2)

The three and nine months ended September 30, 2015 and nine months ended September 2014 represent the impacts of Venezuelan remeasurement losses related to the adoption of new foreign exchange mechanisms.

(3)

The three and nine months ended September 30, 2015 include pension settlement charges primarily related to the purchase of a group annuity contract.

(4)

Adjusted diluted earnings per share for the three months ended September 30, 2015 include the dilutive effect of common share equivalents.  Reported diluted loss per share excludes the effect of common stock equivalents because their inclusion would be anti-dilutive.

(5)

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

September 30, 2015

December 31, 2014

Cash and cash equivalents

$

364,345

$

278,379

Total current assets

1,068,858

1,096,202

Property, plant and equipment, net

421,940

438,746

Total assets

1,928,091

1,939,215

Total current liabilities

437,429

492,395

Short-term debt (1)

2,453

68,166

Long-term debt

350,899

2,488

Total equity

1,011,969

1,285,781

Net Operating Working Capital

September 30, 2015

December 31, 2014

Accounts receivable

$

310,824

$

337,664

Inventory

308,625

341,057

Trade accounts payable

166,858

209,745

Net operating working capital

$

452,591

$

468,976

Net operating working capital to net sales (2)

17.5

%

17.1

%

Invested Capital

September 30, 2015

December 31, 2014

Short-term debt (1)

$

2,453

$

68,166

Long-term debt

350,899

2,488

Total debt

353,352

70,654

Total equity

1,011,969

1,285,781

Invested capital

$

1,365,321

$

1,356,435

Total debt / invested capital

25.9

%

5.2

%

Return on invested capital (3)

12.0

%

19.1

%

 

 

(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 September 30,

2015

2014

OPERATING ACTIVITIES:

Net income (loss)

$

(60,466)

$

45,689

Non-controlling interests in subsidiaries' loss

(15)

(857)

Net income (loss) including non-controlling interests

(60,481)

44,832

Adjustments to reconcile Net income (loss) including non-controlling interests to Net cash provided by operating activities:

Rationalization and asset impairment charges

6,090

28,588

Depreciation and amortization

16,179

17,117

Equity (earnings) loss in affiliates, net

236

(404)

Pension expense and settlement charges

141,244

4,158

Pension contributions and payments

(4,416)

(10,479)

Other non-cash items, net

(46,517)

9,382

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

Decrease in accounts receivable

28,343

20,953

Decrease in inventories

26,284

6,302

(Decrease) increase in trade accounts payable

(3,412)

3,915

Net change in other current assets and liabilities

3,197

25,919

Net change in other long-term assets and liabilities

(1,381)

(835)

NET CASH PROVIDED BY OPERATING ACTIVITIES

105,366

149,448

INVESTING ACTIVITIES:

Capital expenditures

(10,970)

(15,483)

Acquisition of businesses, net of cash acquired

(33,882)

Proceeds from sale of property, plant and equipment

752

11,537

Other investing activities

(2,103)

NET CASH USED BY INVESTING ACTIVITIES

(46,203)

(3,946)

FINANCING ACTIVITIES:

Net change in borrowings

170,371

81,257

Proceeds from exercise of stock options

564

1,935

Excess tax benefits from stock-based compensation

194

883

Purchase of shares for treasury

(139,337)

(130,070)

Cash dividends paid to shareholders

(21,694)

(18,276)

Other financing activities

(44)

NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES

10,054

(64,271)

Effect of exchange rate changes on Cash and cash equivalents

(17,609)

(5,993)

INCREASE IN CASH AND CASH EQUIVALENTS

51,608

75,238

Cash and cash equivalents at beginning of period

312,737

204,285

Cash and cash equivalents at end of period

$

364,345

$

279,523

Cash dividends paid per share

$

0.29

$

0.23

 

 

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Condensed Consolidated Statements of Cash Flows

Nine months ended September 30,

2015

2014

OPERATING ACTIVITIES:

Net income

$

78,786

$

179,474

Non-controlling interests in subsidiaries' loss

(73)

(929)

Net income including non-controlling interests

78,713

178,545

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

   provided by operating activities:

Rationalization and asset impairment charges

6,120

29,447

Depreciation and amortization

47,897

53,017

Equity earnings in affiliates, net

(252)

(1,901)

Pension expense and settlement charges

151,848

9,634

Pension contributions and payments

(52,121)

(34,643)

Other non-cash items, net

(52,307)

30,041

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

Decrease (increase) in accounts receivable

14,661

(22,388)

Decrease (increase) in inventories

27,824

(11,153)

Decrease in trade accounts payable

(34,629)

(11,534)

Net change in other current assets and liabilities

47,032

53,299

Net change in other long-term assets and liabilities

650

(4,311)

NET CASH PROVIDED BY OPERATING ACTIVITIES

235,436

268,053

INVESTING ACTIVITIES:

Capital expenditures

(40,187)

(55,430)

Acquisition of businesses, net of cash acquired

(33,882)

(892)

Proceeds from sale of property, plant and equipment

2,173

17,046

Other investing activities

(79)

778

NET CASH USED BY INVESTING ACTIVITIES

(71,975)

(38,498)

FINANCING ACTIVITIES:

Net change in borrowings

314,420

71,114

Proceeds from exercise of stock options

4,600

5,945

Excess tax benefits from stock-based compensation

1,487

3,361

Purchase of shares for treasury

(297,804)

(249,403)

Cash dividends paid to shareholders

(65,942)

(55,395)

Other financing activities

(8,040)

(2,330)

NET CASH USED BY FINANCING ACTIVITIES

(51,279)

(226,708)

Effect of exchange rate changes on Cash and cash equivalents

(26,216)

(23,149)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

85,966

(20,302)

Cash and cash equivalents at beginning of period

278,379

299,825

Cash and cash equivalents at end of period

$

364,345

$

279,523

Cash dividends paid per share

$

0.87

$

0.69

 

 

 

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 September 30, 2015

Net sales

$

408,416

$

80,596

$

45,505

$

47,727

$

62,922

$

$

645,166

Inter-segment sales

28,055

4,631

2,794

36

2,307

(37,823)

Total

$

436,471

$

85,227

$

48,299

$

47,763

$

65,229

$

(37,823)

$

645,166

EBIT (1)

$

(69,661)

$

8,069

$

(2,938)

$

(24,661)

$

6,422

$

(646)

$

(83,415)

As a percent of total sales

(16.0%)

9.5

%

(6.1%)

(51.6%)

9.8

%

(12.9%)

Special items charge (gain) (2)

$

149,404

$

268

$

4,944

$

26,506

$

$

$

181,122

EBIT, as adjusted (4)

$

79,743

$

8,337

$

2,006

$

1,845

$

6,422

$

(646)

$

97,707

As a percent of total sales

18.3

%

9.8

%

4.2

%

3.9

%

9.8

%

15.1

%

Three months ended September 30, 2014

Net sales

$

439,621

$

107,507

$

57,404

$

32,862

$

78,383

$

$

715,777

Inter-segment sales

30,365

4,533

3,595

9

2,009

(40,511)

Total

$

469,986

$

112,040

$

60,999

$

32,871

$

80,392

$

(40,511)

$

715,777

EBIT (1)

$

84,450

$

15,302

$

(28,871)

$

(1,172)

$

8,947

$

(324)

$

78,332

As a percent of total sales

18.0

%

13.7

%

(47.3%)

(3.6%)

11.1

%

10.9

%

Special items charge (gain) (3)

$

$

(81)

$

28,567

$

582

$

$

$

29,068

EBIT, as adjusted (4)

$

84,450

$

15,221

$

(304)

$

(590)

$

8,947

$

(324)

$

107,400

As a percent of total sales

18.0

%

13.6

%

(0.5%)

(1.8%)

11.1

%

15.0

%

Nine months ended September 30, 2015

Net sales

$

1,236,479

$

259,915

$

143,798

$

123,064

$

204,550

$

$

1,967,806

Inter-segment sales

79,797

12,687

9,028

154

7,034

(108,700)

Total

$

1,316,276

$

272,602

$

152,826

$

123,218

$

211,584

$

(108,700)

$

1,967,806

EBIT (1)

$

79,017

$

25,059

$

2,434

$

(20,133)

$

22,221

$

28

$

108,626

As a percent of total sales

6.0

%

9.2

%

1.6

%

(16.3%)

10.5

%

5.5

%

Special items charge (gain) (2)

$

149,404

$

1,507

$

4,944

$

26,506

$

$

$

182,361

EBIT, as adjusted (4)

$

228,421

$

26,566

$

7,378

$

6,373

$

22,221

$

28

$

290,987

As a percent of total sales

17.4

%

9.7

%

4.8

%

5.2

%

10.5

%

14.8

%

Nine months ended September 30, 2014

Net sales

$

1,271,017

$

328,487

$

185,687

$

115,906

$

228,273

$

$

2,129,370

Inter-segment sales

96,668

15,887

11,644

73

6,389

(130,661)

Total

$

1,367,685

$

344,374

$

197,331

$

115,979

$

234,662

$

(130,661)

$

2,129,370

EBIT (1)

$

247,077

$

38,489

$

(29,029)

$

(5,545)

$

22,183

$

3,167

$

276,342

As a percent of total sales

18.1

%

11.2

%

(14.7%)

(4.8%)

9.5

%

13.0

%

Special items charge (gain) (3)

$

(68)

$

923

$

28,450

$

21,715

$

$

$

51,020

EBIT, as adjusted (4)

$

247,009

$

39,412

$

(579)

$

16,170

$

22,183

$

3,167

$

327,362

As a percent of total sales

18.1

%

11.4

%

(0.3%)

13.9

%

9.5

%

15.4

%

 

 

(1)

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

(2)

Special items in the three and nine months ended September 30, 2015 represent rationalization charges related to employee severance and other related costs, charges related to pension settlements, charges related to the impairment of long-lived assets and goodwill and charges relating to a Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism.

(3)

Special items in the three and nine months ended September 30, 2014 include non-cash asset impairment charges partially offset by net rationalization gains including a gain on the sale of real estate. Special items in the nine months ended September 30, 2014 also include the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter.

(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 September 30th Change in Net Sales by Segment

Change in Net Sales due to:

Net Sales

2014

Volume

Acquisitions

Price

Foreign

Exchange

Net Sales

2015

Operating Segments

North America Welding

$

439,621

$

(44,838)

$

19,637

$

4,157

$

(10,161)

$

408,416

Europe Welding

107,507

(10,268)

(874)

(15,769)

80,596

Asia Pacific Welding

57,404

(9,575)

1,801

(570)

(3,555)

45,505

South America Welding

32,862

(2,057)

26,140

(9,218)

47,727

The Harris Products Group

78,383

(6,563)

(5,418)

(3,480)

62,922

Consolidated

$

715,777

$

(73,301)

$

21,438

$

23,435

$

(42,183)

$

645,166

% Change

North America Welding

(10.2%)

4.5

%

0.9

%

(2.3%)

(7.1%)

Europe Welding

(9.6%)

(0.8%)

(14.7%)

(25.0%)

Asia Pacific Welding

(16.7%)

3.1

%

(1.0%)

(6.2%)

(20.7%)

South America Welding

(6.3%)

79.5

%

(28.1%)

45.2

%

The Harris Products Group

(8.4%)

(6.9%)

(4.4%)

(19.7%)

Consolidated

(10.2%)

3.0

%

3.3

%

(5.9%)

(9.9%)

Nine Months Ended September 30th Change in Net Sales by Segment

Change in Net Sales due to:

Net Sales

2014

Volume

Acquisitions

Price

Foreign

Exchange

Net Sales

2015

Operating Segments

North America Welding

$

1,271,017

$

(65,764)

$

46,358

$

9,637

$

(24,769)

$

1,236,479

Europe Welding

328,487

(10,409)

(1,757)

(56,406)

259,915

Asia Pacific Welding

185,687

(33,970)

1,801

(1,856)

(7,864)

143,798

South America Welding

115,906

(15,351)

63,310

(40,801)

123,064

The Harris Products Group

228,273

(346)

(13,988)

(9,389)

204,550

Consolidated

$

2,129,370

$

(125,840)

$

48,159

$

55,346

$

(139,229)

$

1,967,806

% Change

North America Welding

(5.2%)

3.6

%

0.8

%

(1.9%)

(2.7%)

Europe Welding

(3.2%)

(0.5%)

(17.2%)

(20.9%)

Asia Pacific Welding

(18.3%)

1.0

%

(1.0%)

(4.2%)

(22.6%)

South America Welding

(13.2%)

54.6

%

(35.2%)

6.2

%

The Harris Products Group

(0.2%)

(6.1%)

(4.1%)

(10.4%)

Consolidated

(5.9%)

2.3

%

2.6

%

(6.5%)

(7.6%)

 

 

SOURCE Lincoln Electric Holdings, Inc.



RELATED LINKS

http://www.lincolnelectric.com