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| 8-K - FORM 8-K - LINCOLN ELECTRIC HOLDINGS INC | d386846d8k.htm |
 Christopher L. Mapes Chairman, President & CEO Vincent K. Petrella Executive Vice President & CFO Proposed Acquisition of Air Liquide Welding April 28, 2017 Exhibit 99.1 The Welding Experts ® |
 Forward-Looking Statements:
Statements made during this presentation which are not historical facts may be
considered forward-looking statements. Forward-looking statements
involve risks and uncertainties that could cause actual events or results
to differ materially from those expressed or implied. 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. These risks include our ability to successfully complete the Air Liquide Welding acquisition, including the receipt of required regulatory approvals and the satisfaction
or waiver of other closing conditions; our ability to successfully integrate Air
Liquide Welding; our ability to achieve the expected growth and
efficiencies from the Air Liquide Welding acquisition, accretion and
generate generally attractive return on capital, within the expected time frame or at
all. Safe Harbor
2 |
 Snapshot
of Air Liquide Welding •
Acquisition includes the Air Liquide
Welding European and
Canadian welding and gas valve businesses
• Approximately 2,000 employees, primarily across six European countries and Canada • 13 manufacturing facilities • Over 15,000 customers worldwide • Strong, complementary positions in key markets, including France, Germany, Italy and Canada Air Liquide Welding (ALW), an Air Liquide subsidiary, is an established leader in welding and cutting solutions in Europe with premier global brands and strong customer relationships Product Mix Business Mix Europe 82% Europe Exports & North America 18% €367M (USD$405M) 3 2 1 1 1 2 FY2016 Net Sales and business mix U.S. dollar-denominated net sales reflects an average 2016 Euro:USD exchange rate
Consumables (filler metals) 62% Equipment 38% |
 Overview
of the Definitive Agreement for ALW •
Benefit from expanded product portfolios and application expertise
• Improves channel and market access in both Europe and globally • Includes exclusive global supply agreement • Offers attractive near-term growth synergies and efficiency savings • Complements our 2020 growth strategy 4 Represents a strong strategic fit to expand and strengthen European operations and Harris Products Group |
 Overview
of the Definitive Agreement for ALW •
€115 million purchase price
• Approximate 7x EBITDA multiple • Accretive to adjusted earnings per share (EPS) – Approximately $0.03 per quarter or $0.12 annually in the first year after acquisition
– Approximately $0.06 per quarter or $0.24 annually in the second year of operation
with initial synergies
• Expect synergies to generate an incremental $30 million of EBITDA per year in the fourth
year of operation 5 Disciplined M&A approach with opportunity to generate incremental value Reflects 2016 Adjusted EBITDA 1 1 |
 Unparalleled New Welding and Cutting Organization
6 Combination creates an extraordinary team of talented industry experts • Only dedicated welding and cutting organization among the top-3 competitors • Establishes an unrivaled breadth and depth of commercial and technical application
expertise in our industry worldwide
• Extensive operational and process knowledge to drive operational excellence • Reinforces our mission of being the “employer of choice” in our industry by investing in
growth and offering expanded career opportunities
|
 Combines
Premier Product Portfolios Leverages two premier and complementary product
portfolios to offer best-in-class solutions
• Represents growth opportunity in high-margin products with strategic emphasis
– ALW increases Lincoln Electric’s (LECO’s) portfolio in specialty alloy consumables with ALW’s top-tier
alloy brands and technologies
– ALW expands LECO’s Harris Products Group gas valve portfolio – LECO broadens ALW’s product portfolio in equipment solutions to better serve their customers
7 |
 Expands
and Strengthens Geographic Footprint 8
Combination of complementary geographic footprints
strengthens Lincoln Electric’s position in Europe and
its go-to-market effectiveness
Air Liquide Welding’s stronger presence
Lincoln Electric’s stronger presence
Both ALW and LECO are participants |
 Augments
Customer Base and Expands Industry Exposure 9
Combination leverages the strengths of each business to better serve a
larger customer base with higher-value solutions in more diverse
industries •
Enables LECO to better penetrate attractive end markets:
– Chemical processing – Power generation – Infrastructure • LECO benefits from an expanded IP portfolio to generate new and differentiated solutions • ALW customer base adds attractive channels to sell Harris Product Group solutions • Includes exclusive global supply agreement Automotive/ Transportation General Fabrication Heavy Industries 3 Energy & Process Industries 2 Construction & Infrastructure 4 33% 22% 18% 17% 10% General Fabrication 33% 20% Energy & Process Industries 2 20% Heavy Industries 3 18% Automotive/ Transportation 9% Construction & Infrastructure 4 1 Reflects 2015 revenue end market mix 1 applications Energy & Process Industries includes Pipe mill, Pipeline, Offshore, Power generation
2 Heavy Industries includes Heavy Fabrication, Shipbuilding and Maintenance & Repair
3 and Process industry applications Construction & Infrastructure includes Structural applications 4 1 Combined End-Market Breakdown Lincoln Electric End-Market Breakdown |
 Complements 2020 Strategic Priorities
Proposed acquisition augments the 2020 strategy in four targeted areas
by leveraging the complementary strengths of each business
Leverage Best Practices
in Manufacturing Drive Greater Efficiencies Operational Excellence Arc Welding Automation Alloys and Aluminum Spec Valves Cutting Leverage Core + Adjacencies Broadens European Footprint Strengthens Channel Strategy Reach Enhances Canadian Business Chemical Processing Power Generation General Industrial Infrastructure Diverse Sectors Industrial Gas 10 |
 Attractive Acquisition with Near-Term Opportunities
Proposed acquisition would be immediately accretive to adjusted earnings and
cash flow with additional benefits over time as the businesses are
integrated •
Immediately accretive:
– Approximately $0.03 Adjusted EPS contribution per quarter ($0.12 Adj. EPS per year) in the first
year after acquisition
– Approximately $0.06 Adjusted EPS contribution per quarter ($0.24 Adj. EPS per year) in the
second year of operation with initial synergy benefits
• Expected sources of near-term benefits:
– Operational Efficiencies: • Leveraging manufacturing footprint across product areas • Improved scale in procurement and operations • Greater efficiencies in back office and SG&A processes – Growth Opportunities: • Enhanced solutions selling opportunities • Expanded channel synergies for a broad product portfolio • Additional synergy benefits expected over time once businesses are fully integrated
– Expect synergies to generate $30 million in EBITDA, $0.35 to Adjusted EPS, annually starting in
the fourth year of operation
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 Expected
Next Steps 12
REGULATORY REVIEW PHASE March 2, 2017 Estimated H2-2017 CLOSING DEFINITIVE AGREEMENT SIGNED • Closing subject to customary conditions including: • Absence of any law or order in effect which would materially impair the close of the transaction
• Approval of the transaction by the application competition authorities • Foreign investment authorization from the French Ministry of Economy and Finance
• Expected to close in the second half of 2017 WORKS COUNCIL INFORMATION & CONSULTATION WORKS COUNCIL OPINIONS ISSUED MOU SIGNED April 27, 2017 |
 Summary
Slide •
Brings two leading welding and cutting businesses together in Europe
• A strategic fit with a complementary profile that offers growth opportunities across 3
distinct areas of our business:
– Alloys (specialty consumables) – Equipment systems – Harris Products Group solutions • Transaction is immediately accretive with growth and efficiency opportunities that are
expected to generate incremental value
– Expect synergies to generate $30 million in EBITDA, $0.35 to Adjusted EPS, annually starting in the
fourth year of operation
• Attractive returns – 15%+ internal rate of return (IRR) – 10%+ cash ROIC in the first year of operation 13 |