LINCOLN ELECTRIC HOLDINGS INC - FORM 8-K - EX-99.1

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8-K - 8-K - LINCOLN ELECTRIC HOLDINGS INC	leco-20210727x8k.htm

Exhibit 99.1

Investor Relations: Amanda Butler (216) 383-2534

Amanda_Butler@lincolnelectric.com

LINCOLN ELECTRIC REPORTS SECOND QUARTER 2021 RESULTS

Second Quarter 2021 Highlights

◾

Net sales increase 39.9% to $826.5 million on 36.0% higher organic sales

◾

Operating income margin of 14.7%; Adjusted operating income margin of 15.1%

◾

EPS increases 255.6% to record $1.60; Adjusted EPS increases 108.8% to record $1.67

◾

Strong cash flow from operations of $100.0 million

◾

ROIC increases 280 basis points to 21.4%

CLEVELAND, Tuesday, July 27 2021 - Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported second quarter 2021 net income of $96.1 million, or diluted earnings per share (EPS) of $1.60, which includes special item after-tax charges of $4.5 million, or $0.07 EPS. This compares with prior year period net income of $27.0 million, or $0.45 EPS, which included special item after-tax charges of $21.0 million, or $0.35 EPS. Excluding these items, second quarter 2021 Adjusted net income was $100.6 million, or $1.67 Adjusted EPS. This compares with Adjusted net income of $48.0 million, or $0.80 Adjusted EPS in the prior year period.

Second quarter 2021 sales increased 39.9% to $826.5 million from a 36.0% increase in organic sales, 3.3% favorable foreign exchange and a 0.6% benefit from acquisitions. Operating income for the second quarter 2021 was $121.8 million, or 14.7% of sales, including special item charges of $3.3 million. This compares with operating income of $39.8 million, or 6.7% of sales, in the prior year period. Excluding special items, Adjusted operating income was $125.1 million, or 15.1% of sales, as compared with $63.0 million, or 10.7% of sales, in the prior year period.

“We achieved record second quarter earnings performance while servicing accelerating demand and improving productivity in a challenging operating environment,” said Christopher L. Mapes, Chairman, President and Chief Executive Officer. “The team has done a superb job working through supply chain constraints and mitigating inflationary headwinds, which we expect will continue through 2021.” Mapes continued, “With 80% of our revenue driven by growing end markets, we are accelerating our investments in growth and operational excellence to deliver superior value to our stakeholders through this cycle.”

Six Months 2021 Summary

Net income for the six months ended June 30, 2021 was $170.3 million, or $2.83 EPS. This compares with $82.6 million, or $1.37 EPS, in the comparable 2020 period. Reported EPS includes special item after-tax charges of $13.1 million or $0.21 EPS, as compared with special item after-tax net charges of $26.3 million, or $0.44 EPS in the prior year period. Excluding these items, adjusted net income for the six months ended June 30, 2021 increased 68.4% to $183.4 million, or $3.04 EPS, compared with $108.9 million, or $1.81 EPS, in the comparable 2020 period.

Sales increased 22.5% to $1.6 billion in the six months ended June 30, 2021 from a 20.0% increase in organic sales, 2.3% favorable foreign exchange and a 0.3% benefit from acquisitions. Operating income for the six months ended June 30, 2021 was $225.8 million, or 14.3% of sales. This compares with operating income of $120.8 million, or 9.3% of sales, in the comparable 2020 period. Excluding special items, adjusted operating income was $234.3 million, or 14.8% of sales, as compared with $151.4 million, or 11.7% of sales, in the comparable 2020 period.

LINCOLN ELECTRIC REPORTS SECOND QUARTER 2021 RESULTS

Webcast Information

A conference call to discuss second quarter 2021 financial results will be webcast live today, July 27, 2021, at 10:00 a.m., Eastern Time. This webcast is accessible at https://ir.lincolnelectric.com. Listeners should go to the web site prior to the call to register, download and install any necessary audio software. A replay of the webcast will be available on the Company's web site.

If investors would like to ask questions, please dial (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 9053554. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the second quarter 2021 can also be obtained at https://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment and has a leading global position in brazing and soldering alloys. Headquartered in Cleveland, Ohio, Lincoln has 55 manufacturing locations in 18 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at https://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Organic sales, Cash conversion, Return on invested capital and Earnings before interest, taxes, depreciation and amortization ("EBITDA") are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently.

Forward-Looking Statements

The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic, financial and market conditions; the effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as political unrest, acts of terror, natural disasters and pandemics, including the current coronavirus disease ("COVID-19") pandemic, 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, 2020.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Consolidated Statements of Income


												Fav (Unfav) to
	Three Months Ended June 30,											Prior Year
	2021			% of Sales			2020			% of Sales		$			%
Net sales	$	826,454			100.0	%	$	590,727		100.0	%	$	235,727		39.9	%
Cost of goods sold		552,445			66.8	%		401,349		67.9	%		(151,096)		(37.6)	%
Gross profit		274,009			33.2	%		189,378		32.1	%		84,631		44.7	%
Selling, general & administrative expenses		151,557			18.3	%		126,376		21.4	%		(25,181)		(19.9)	%
Rationalization and asset impairment charges		630			0.1	%		23,238		3.9	%		22,608		97.3	%
Operating income		121,822			14.7	%		39,764		6.7	%		82,058		206.4	%
Interest expense, net		5,663			0.7	%		5,881		1.0	%		218		3.7	%
Other income (expense)		1,702			0.2	%		(203)		—			1,905		938.4	%
Income before income taxes		117,861			14.3	%		33,680		5.7	%		84,181		249.9	%
Income taxes		21,581			2.6	%		6,667		1.1	%		(14,914)		(223.7)	%
Effective tax rate		18.3	%					19.8	%				1.5	%
Net income including non-controlling interests		96,280			11.6	%		27,013		4.6	%		69,267		256.4	%
Non-controlling interests in subsidiaries’ income (loss)		175			—			17		—			158		929.4	%
Net income	$	96,105			11.6	%	$	26,996		4.6	%	$	69,109		256.0	%

Basic earnings per share	$	1.62					$	0.45				$	1.17		260.0	%
Diluted earnings per share	$	1.60					$	0.45				$	1.15		255.6	%
Weighted average shares (basic)		59,464						59,354
Weighted average shares (diluted)		60,164						59,831


											Fav (Unfav) to
	Six Months Ended June 30,										Prior Year
	2021			% of Sales		2020			% of Sales		$			%
Net sales	$	1,583,475		100.0	%	$	1,292,718		100.0	%	$	290,757		22.5	%
Cost of goods sold		1,055,699		66.7	%		866,018		67.0	%		(189,681)		(21.9)	%
Gross profit		527,776		33.3	%		426,700		33.0	%		101,076		23.7	%
Selling, general & administrative expenses		297,233		18.8	%		276,103		21.4	%		(21,130)		(7.7)	%
Rationalization and asset impairment charges		4,793		0.3	%		29,759		2.3	%		24,966		83.9	%
Operating income		225,750		14.3	%		120,838		9.3	%		104,912		86.8	%
Interest expense, net		11,022		0.7	%		11,339		0.9	%		317		2.8	%
Other income (expense)		286		—			106		—			180		169.8	%
Income before income taxes		215,014		13.6	%		109,605		8.5	%		105,409		96.2	%
Income taxes		44,601		2.8	%		27,037		2.1	%		(17,564)		(65.0)	%
Effective tax rate		20.7	%				24.7	%				4.0	%
Net income including non-controlling interests		170,413		10.8	%		82,568		6.4	%		87,845		106.4	%
Non-controlling interests in subsidiaries’ income (loss)		131		—			10		—			121		1,210.0	%
Net income	$	170,282		10.8	%	$	82,558		6.4	%	$	87,724		106.3	%

Basic earnings per share	$	2.86				$	1.38				$	1.48		107.2	%
Diluted earnings per share	$	2.83				$	1.37				$	1.46		106.6	%
Weighted average shares (basic)		59,553					59,769
Weighted average shares (diluted)		60,229					60,300

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands)

(Unaudited)

Balance Sheet Highlights


Selected Consolidated Balance Sheet Data	June 30, 2021			December 31, 2020
Cash and cash equivalents	$	190,884		$	257,279
Accounts receivable, net		457,454			373,487
Inventories		477,677			381,258
Total current assets		1,237,940			1,112,343
Property, plant and equipment, net		513,686			522,092
Total assets		2,512,726			2,314,453
Trade accounts payable		317,771			256,530
Total current liabilities		696,020			549,449
Short-term debt ⁽¹⁾		10,435			2,734
Long-term debt, less current portion		718,137			715,456
Total equity		859,623			790,250

Operating Working Capital	June 30, 2021			December 31, 2020
Average operating working capital to Net sales ⁽²⁾		17.2	%		17.4	%

Invested Capital	June 30, 2021			December 31, 2020
Short-term debt ⁽¹⁾	$	10,435		$	2,734
Long-term debt, less current portion		718,137			715,456
Total debt		728,572			718,190
Total equity		859,623			790,250
Invested capital	$	1,588,195		$	1,508,440

Total debt / invested capital		45.9	%		47.6	%

(1)

Includes current portion of long-term debt.

(2)

Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Non-GAAP Financial Measures


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating income as reported	$	121,822		$	39,764		$	225,750		$	120,838
Special items (pre-tax):
Rationalization and asset impairment charges ⁽²⁾		630			23,238			4,793			29,759
Acquisition transaction costs ⁽³⁾		810			—			1,923			—
Amortization of step up in value of acquired inventories ⁽⁴⁾		1,841			—			1,841			806
Adjusted operating income ⁽¹⁾	$	125,103		$	63,002		$	234,307		$	151,403
As a percent of total sales		15.1	%		10.7	%		14.8	%		11.7	%

Net income as reported	$	96,105		$	26,996		$	170,282		$	82,558
Special items:
Rationalization and asset impairment charges ⁽²⁾		630			23,238			4,793			29,759
Acquisition transaction costs ⁽³⁾		810			—			1,923			—
Pension settlement charges ⁽⁵⁾		1,650			3,334			6,536			3,334
Amortization of step up in value of acquired inventories ⁽⁴⁾		1,841			—			1,841			806
Tax effect of Special items ⁽⁶⁾		(433)			(5,576)			(1,994)			(7,552)
Adjusted net income ⁽¹⁾		100,603			47,992			183,381			108,905
Non-controlling interests in subsidiaries’ income (loss)		175			17			131			10
Interest expense, net		5,663			5,881			11,022			11,339
Income taxes as reported		21,581			6,667			44,601			27,037
Tax effect of Special items ⁽⁶⁾		433			5,576			1,994			7,552
Adjusted EBIT ⁽¹⁾	$	128,455		$	66,133		$	241,129		$	154,843

Effective tax rate as reported		18.3	%		19.8	%		20.7	%		24.7	%
Net special item tax impact		(0.4)	%		0.5	%		(0.5)	%		(0.6)	%
Adjusted effective tax rate ⁽¹⁾		17.9	%		20.3	%		20.2	%		24.1	%

Diluted earnings per share as reported	$	1.60		$	0.45		$	2.83		$	1.37
Special items per share		0.07			0.35			0.21			0.44
Adjusted diluted earnings per share ⁽¹⁾	$	1.67		$	0.80		$	3.04		$	1.81

Weighted average shares (diluted)		60,164			59,831			60,229			60,300

(1)

Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate and Adjusted diluted earnings per share are non-GAAP financial measures. Refer to Non-GAAP Information section.

(2)

Primarily related to severance, gains or losses on the disposal of assets and asset impairments of long-lived assets.

(3)

Related to an acquisition and are included in Selling, general & administrative expenses.

(4)

Related to acquisitions and are included in Cost of goods sold.

(5)

Related to lump sum pension payments and are included in Other income (expense).

(6)

Includes the net tax impact of Special items recorded during the respective periods.

The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Non-GAAP Financial Measures


	Twelve Months Ended June 30,
Return on Invested Capital	2021			2020
Net income as reported	$	293,839		$	218,735
Rationalization and asset impairment charges		20,502			40,105
Acquisition transaction costs		1,923			—
Pension settlement charges		11,321			3,334
Amortization of step up in value of acquired inventories		1,841			2,415
Gain on change in control		—			(7,601)
Tax effect of Special items ⁽²⁾		(5,036)			(9,374)
Adjusted net income ⁽¹⁾	$	324,390		$	247,614
Plus: Interest expense, net of tax of $5,843 and $6,439 in 2021 and 2020, respectively		17,368			19,348
Less: Interest income, net of tax of $389 and $563 in 2021 and 2020, respectively		1,166			1,691
Adjusted net income before tax-effected interest	$	340,592		$	265,271

Invested Capital	June 30, 2021			June 30, 2020
Short-term debt	$	10,435		$	49,597
Long-term debt, less current portion		718,137			715,817
Total debt		728,572			765,414
Total equity		859,623			660,111
Invested capital	$	1,588,195		$	1,425,525

Return on invested capital ⁽¹⁾		21.4	%		18.6	%


	Twelve Months Ended June 30,
Total Debt / EBITDA	2021		2020
Net income as reported	$	293,839	$	218,735
Income taxes		75,460		62,955
Interest expense, net		21,656		23,533
Depreciation and amortization		77,922		83,313
EBITDA ⁽¹⁾	$	468,877	$	388,536

	June 30, 2021		June 30, 2020
Total debt	$	728,572	$	765,414

Total debt / EBITDA		1.55		1.97

(1)

Adjusted net income, Return on invested capital and EBITDA are non-GAAP financial measures. Refer to Non-GAAP Information section.

(2)

Includes the net tax impact of Special items recorded during the respective periods.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Condensed Consolidated Statements of Cash Flows


	Three Months Ended June 30,
	2021		2020
OPERATING ACTIVITIES:
Net income	$	96,105	$	26,996
Non-controlling interests in subsidiaries’ income (loss)		175		17
Net income including non-controlling interests		96,280		27,013
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:
Rationalization and asset impairment net (gains) charges		(1,434)		22,141
Depreciation and amortization		19,390		20,050
Equity earnings in affiliates, net		(114)		(81)
Other non-cash items, net		(4,123)		(1,106)
Changes in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable		(21,776)		49,364
Increase in inventories		(40,618)		(12,977)
Increase (decrease) in trade accounts payable		20,950		(23,439)
Net change in other current assets and liabilities		24,950		20,717
Net change in other long-term assets and liabilities		6,467		2,359
NET CASH PROVIDED BY OPERATING ACTIVITIES		99,972		104,041

INVESTING ACTIVITIES:
Capital expenditures		(17,832)		(13,183)
Acquisition of businesses, net of cash acquired		(83,723)		—
Proceeds from sale of property, plant and equipment		1,973		118
NET CASH USED BY INVESTING ACTIVITIES		(99,582)		(13,065)

FINANCING ACTIVITIES:
Net change in borrowings		(144)		(82,682)
Proceeds from exercise of stock options		2,892		955
Purchase of shares for treasury		(25,229)		(3,213)
Cash dividends paid to shareholders		(30,380)		(29,139)
Other financing activities		(763)		—
NET CASH USED BY FINANCING ACTIVITIES		(53,624)		(114,079)

Effect of exchange rate changes on Cash and cash equivalents		1,992		2,783
DECREASE IN CASH AND CASH EQUIVALENTS		(51,242)		(20,320)
Cash and cash equivalents at beginning of period		242,126		163,375
Cash and cash equivalents at end of period	$	190,884	$	143,055

Cash dividends paid per share	$	0.51	$	0.49

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)


	Six Months Ended June 30,
	2021		2020
OPERATING ACTIVITIES:
Net income	$	170,282	$	82,558
Non-controlling interests in subsidiaries’ income (loss)		131		10
Net income including non-controlling interests		170,413		82,568
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:
Rationalization and asset impairment net (gains) charges		(1,374)		21,905
Depreciation and amortization		38,508		41,078
Equity earnings in affiliates, net		(291)		(243)
Other non-cash items, net		(4,820)		(5,288)
Changes in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable		(87,571)		23,666
Increase in inventories		(83,186)		(30,378)
Increase (decrease) in trade accounts payable		63,275		(40,115)
Net change in other current assets and liabilities		47,121		32,410
Net change in other long-term assets and liabilities		3,159		410
NET CASH PROVIDED BY OPERATING ACTIVITIES		145,234		126,013

INVESTING ACTIVITIES:
Capital expenditures		(27,768)		(25,011)
Acquisition of businesses, net of cash acquired		(83,723)		—
Proceeds from sale of property, plant and equipment		2,557		6,218
Other investing activities		6,500		—
NET CASH USED BY INVESTING ACTIVITIES		(102,434)		(18,793)

FINANCING ACTIVITIES:
Net change in borrowings		1,163		15,095
Proceeds from exercise of stock options		5,672		2,002
Purchase of shares for treasury		(53,688)		(112,975)
Cash dividends paid to shareholders		(61,379)		(59,814)
Other financing activities		(763)		—
NET CASH USED BY FINANCING ACTIVITIES		(108,995)		(155,692)

Effect of exchange rate changes on Cash and cash equivalents		(200)		(8,036)
DECREASE IN CASH AND CASH EQUIVALENTS		(66,395)		(56,508)
Cash and cash equivalents at beginning of period		257,279		199,563
Cash and cash equivalents at end of period	$	190,884	$	143,055

Cash dividends paid per share	$	1.02	$	0.98

Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)


	Americas			International			The Harris			Corporate /
	Welding			Welding			Products Group			Eliminations		Consolidated
Three months ended June 30, 2021
Net sales	$	457,468		$	252,352		$	116,634		$	—	$	826,454
Inter-segment sales		39,765			6,897			2,284			(48,946)		—
Total sales	$	497,233		$	259,249		$	118,918		$	(48,946)	$	826,454

Net income												$	96,105
As a percent of total sales													11.6	%

EBIT⁽¹⁾	$	82,484		$	27,526		$	18,212		$	(4,698)	$	123,524
As a percent of total sales		16.6	%		10.6	%		15.3	%				14.9	%
Special items charges (gains) ⁽³⁾		1,650			2,471			—			810		4,931
Adjusted EBIT ⁽²⁾	$	84,134		$	29,997		$	18,212		$	(3,888)	$	128,455
As a percent of total sales		16.9	%		11.6	%		15.3	%				15.5	%

Three months ended June 30, 2020
Net sales	$	333,229		$	177,167		$	80,331		$	—	$	590,727
Inter-segment sales		27,493			4,286			1,753			(33,532)		—
Total sales	$	360,722		$	181,453		$	82,084		$	(33,532)	$	590,727

Net income												$	26,996
As a percent of total sales													4.6	%

EBIT ⁽¹⁾	$	20,695		$	9,117		$	11,713		$	(1,964)	$	39,561
As a percent of total sales		5.7	%		5.0	%		14.3	%				6.7	%
Special items charges (gains) ⁽⁴⁾		26,007			565			—			—		26,572
Adjusted EBIT ⁽²⁾	$	46,702		$	9,682		$	11,713		$	(1,964)	$	66,133
As a percent of total sales		12.9	%		5.3	%		14.3	%				11.2	%

(1)

EBIT is defined as Operating income plus Other income (expense).

(2)

The primary profit measure used by management to assess segment performance is Adjusted EBIT. EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT.

(3)

Special items in 2021 reflect Rationalization and asset impairment charges of $630 in International Welding, pension settlement charges of $1,650 in Americas Welding, amortization of step up in value of acquired inventories of $1,841 in International Welding related to an acquisition and acquisition transaction costs of $810 in Corporate/Eliminations related to an acquisition.

(4)

Special items in 2020 reflect Rationalization and asset impairment charges of $22,673 and $565 in Americas Welding and International Welding, respectively, and pension settlement charges of $3,334 in Americas Welding.

Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)


	Americas			International			The Harris			Corporate /
	Welding			Welding			Products Group			Eliminations		Consolidated
Six months ended June 30, 2021
Net sales	$	882,710		$	475,431		$	225,334		$	—	$	1,583,475
Inter-segment sales		72,513			11,182			4,431			(88,126)		—
Total sales	$	955,223		$	486,613		$	229,765		$	(88,126)	$	1,583,475

Net income												$	170,282
As a percent of total sales													10.8	%

EBIT ⁽¹⁾	$	154,661		$	41,733		$	36,909		$	(7,267)	$	226,036
As a percent of total sales		16.2	%		8.6	%		16.1	%				14.3	%
Special items charges (gains) ⁽³⁾		6,090			7,080			—			1,923		15,093
Adjusted EBIT ⁽²⁾	$	160,751		$	48,813		$	36,909		$	(5,344)	$	241,129
As a percent of total sales		16.8	%		10.0	%		16.1	%				15.2	%

Six months ended June 30, 2020
Net sales	$	751,764		$	375,090		$	165,864		$	—	$	1,292,718
Inter-segment sales		52,276			8,769			3,478			(64,523)		—
Total sales	$	804,040		$	383,859		$	169,342		$	(64,523)	$	1,292,718

Net income												$	82,558
As a percent of total sales													6.4	%

EBIT ⁽¹⁾	$	90,207		$	9,595		$	24,205		$	(3,063)	$	120,944
As a percent of total sales		11.2	%		2.5	%		14.3	%				9.4	%
Special items charges (gains) ⁽⁴⁾		27,197			6,702			—			—		33,899
Adjusted EBIT ⁽²⁾	$	117,404		$	16,297		$	24,205		$	(3,063)	$	154,843
As a percent of total sales		14.6	%		4.2	%		14.3	%				12.0	%

(1)

EBIT is defined as Operating income plus Other income (expense).

(2)

The primary profit measure used by management to assess segment performance is Adjusted EBIT. EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT.

(3)

Special items in 2021 reflect pension settlement charges of $6,090 and $446 in Americas Welding and International Welding, respectively, Rationalization and asset impairment charges of $4,793 in International Welding, amortization of step up in value of acquired inventories of $1,841 in International Welding and acquisition transaction costs of $1,923 in Corporate/Eliminations related to an acquisition.

(4)

Special items in 2020 reflect Rationalization and asset impairment charges of $23,863 and $5,896 in Americas Welding and International Welding, respectively, amortization of step up in value of acquired inventories of $806 in International Welding related to an acquisition, and pension settlement charges of $3,334 in Americas Welding.

Lincoln Electric Holdings, Inc.

Change in Net Sales by Segment

(In thousands)

(Unaudited)

Three Months Ended June 30^th Change in Net Sales by Segment


			Change in Net Sales due to:
	Net Sales											Foreign			Net Sales
	2020		Volume			Acquisitions			Price			Exchange			2021
Operating Segments
Americas Welding	$	333,229	$	90,285		$	—		$	27,330		$	6,624		$	457,468
International Welding		177,167		45,095			3,585			14,712			11,793			252,352
The Harris Products Group		80,331		18,421			—			16,979			903			116,634
Consolidated	$	590,727	$	153,801		$	3,585		$	59,021		$	19,320		$	826,454

% Change
Americas Welding				27.1	%		—			8.2	%		2.0	%		37.3	%
International Welding				25.5	%		2.0	%		8.3	%		6.7	%		42.4	%
The Harris Products Group				22.9	%		—			21.1	%		1.1	%		45.2	%
Consolidated				26.0	%		0.6	%		10.0	%		3.3	%		39.9	%

Six Months Ended June 30^th Change in Net Sales by Segment


			Change in Net Sales due to:
	Net Sales											Foreign			Net Sales
	2020		Volume			Acquisitions			Price			Exchange			2021
Operating Segments
Americas Welding	$	751,764	$	86,495		$	—		$	36,395		$	8,056		$	882,710
International Welding		375,090		56,345			3,585			19,332			21,079			475,431
The Harris Products Group		165,864		30,062			—			29,422			(14)			225,334
Consolidated	$	1,292,718	$	172,902		$	3,585		$	85,149		$	29,121		$	1,583,475

% Change
Americas Welding				11.5	%		—			4.8	%		1.1	%		17.4	%
International Welding				15.0	%		1.0	%		5.2	%		5.6	%		26.8	%
The Harris Products Group				18.1	%		—			17.7	%		—			35.9	%
Consolidated				13.4	%		0.3	%		6.6	%		2.3	%		22.5	%

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LINCOLN ELECTRIC HOLDINGS INC Reports