Core Viewpoint - Lincoln Electric (NASDAQ: LECO) reported a modest earnings beat, but the initial stock reaction indicates that investors were expecting stronger results [1] Summary by Relevant Categories Earnings Performance - The company delivered earnings that exceeded expectations, although the magnitude of the beat was modest [1] Market Reaction - The stock's early reaction suggests that investor sentiment was not fully satisfied with the earnings report, indicating higher expectations from the market [1]

Financial Data and Key Metrics Changes - Sales increased by 8% to $1,061 million, driven by pricing benefits and resilient demand in certain segments [4][10] - Adjusted EPS performance rose by 15%, with record cash flow generation and a cash conversion rate of 149% [4][10] - Gross profit margin expanded by 90 basis points to 36.7%, with gross profit dollars increasing approximately 11% to $389 million [10] Business Line Data and Key Metrics Changes - Americas Welding sales increased approximately 9%, with a 9.6% price increase and a 1.4% contribution from acquisitions [12][14] - International Welding segment sales increased by 1.6%, with a 4% benefit from acquisitions and 2% favorable foreign exchange translation [15] - Harris Products Group sales increased by 15%, driven by 2% higher volumes and nearly 12% higher prices [16] Market Data and Key Metrics Changes - Organic sales increased by 5.6%, with stabilization in demand for short cycle consumables in the Americas [5][7] - Three of five end markets achieved steady to higher organic sales growth, with notable improvements in construction and agricultural equipment [8] - Automation sales were approximately $200 million, slightly below expectations due to project timing, but expected to increase by 15%-20% sequentially in Q4 [7][10] Company Strategy and Development Direction - The company is in the final quarter of its five-year Higher Standard 2025 strategy, focusing on long-term growth and shareholder returns [9] - Strategic investments and operational agility are aimed at offsetting inflation and volume headwinds [4][9] - The company is optimistic about future growth in capital spending, particularly in the automotive sector, expected to improve in early to mid-2026 [8] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges in capital spending, particularly in the automation portfolio, but expressed optimism about demand recovery [4][8] - The company expects traditional seasonality in sales performance moving into Q4, with modest sequential improvement in operating income margin [17] - Management highlighted a cautious optimism regarding European market recovery, although no immediate order intake was observed [54] Other Important Information - The company generated record cash flows from operations, with a year-to-date increase of approximately 13% [16] - A 5.3% increase in the annual dividend payout rate was announced, marking the 30th consecutive increase [17] - The effective tax rate was reported at 26.1%, primarily due to special item tax expenses [12] Q&A Session Summary Question: Demand trends in construction and infrastructure - Management noted continued strength in the Americas welding segment, with challenges in international markets [24] Question: Automation order rates and margin implications - Management indicated that while automation has higher fixed costs, an uptick in orders is expected to positively impact margins in the future [26][28] Question: Cycle positioning and demand recovery into 2026 - Management expressed cautious optimism about growth, particularly in consumables, but emphasized the need for consistent order activity before predicting a growth pattern [36][44] Question: European volume growth outlook - Management acknowledged encouraging commentary from European governments but remained cautious about actual order intake [54] Question: Volumes expected in Q4 and margin expectations - Management expects traditional seasonality in Q4, with Americas segment margins anticipated to be in the higher end of the 18%-19% range [58][59] Question: Pricing dynamics in the Harris Products Group - Management explained that pricing is largely driven by commodity prices and market adjustments, with expectations for continued pricing strength [67]

Core Insights - Lincoln Electric Holdings (LECO) reported revenue of $1.06 billion for the quarter ended September 2025, marking a year-over-year increase of 7.9% and an EPS of $2.47 compared to $2.14 a year ago, exceeding Zacks Consensus Estimates [1] Financial Performance - The revenue of $1.06 billion surpassed the Zacks Consensus Estimate of $1.04 billion by +1.91% [1] - The EPS of $2.47 also exceeded the consensus estimate of $2.39, resulting in a surprise of +3.35% [1] - The Harris Products Group net sales reached $149.8 million, exceeding the four-analyst average estimate of $140.54 million, with a year-over-year change of +14.8% [4] - Total sales for the Harris Products Group were $153.25 million, above the average estimate of $143.98 million, reflecting a year-over-year change of +14.7% [4] - International Welding total sales were $229.46 million, slightly above the average estimate of $229.27 million, with a year-over-year change of +2.6% [4] - Americas Welding total sales reached $721.85 million, surpassing the average estimate of $706.38 million, indicating a year-over-year change of +8.1% [4] Segment Performance - Net sales for Americas Welding were $691.79 million, exceeding the average estimate of $671.09 million, with a year-over-year change of +8.6% [4] - Inter-segment sales for International Welding were $9.83 million, above the average estimate of $7.69 million, representing a year-over-year change of +33.4% [4] - Adjusted EBIT for Americas Welding was $131.62 million, slightly below the five-analyst average estimate of $132.17 million [4] - Adjusted EBIT for International Welding was $25.82 million, exceeding the five-analyst average estimate of $25.27 million [4] Stock Performance - Lincoln Electric shares returned +1.1% over the past month, compared to the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential outperformance against the broader market in the near term [3]

Financial Data and Key Metrics Changes - Sales increased by 8% driven by pricing benefits and resilient demand in the Americas Welding and Harris Products Group segments [6][12] - Adjusted EPS performance rose by 15% with record cash flow generation and a cash conversion rate of 149% [6][12] - Gross profit margin expanded by 90 basis points to 36.7% despite lower volumes [12] Business Line Data and Key Metrics Changes - Americas Welding sales increased by approximately 9% due to higher prices and a contribution from acquisitions, with volume declines narrowing to about 2% [14][15] - International Welding segment sales rose by 1.6%, with a 4% benefit from acquisitions and 2% from favorable foreign exchange, but volumes decreased by 4% [16] - Harris Products Group sales increased by 15%, driven by 2% higher volumes and nearly 12% higher prices [17] Market Data and Key Metrics Changes - Organic sales in the Americas increased by a high single-digit percentage, while international heavy industries faced challenges [9][10] - The automation portfolio faced deferred capital spending, particularly in the automotive sector, but showed signs of improvement in order rates [8][10] Company Strategy and Development Direction - The company is in the final quarter of its five-year Higher Standard 2025 strategy, focusing on long-term growth and balanced capital allocation [10][11] - Strategic investments and operational agility are aimed at offsetting inflation and volume headwinds while maintaining a neutral price-cost position [6][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand trends in construction and infrastructure, with expectations for a gradual recovery in capital investment [22][36] - The company anticipates a modest sequential improvement in operating income margin and is maintaining its top-line and margin assumptions for the year [19][20] Other Important Information - The company generated record cash flows from operations, with a year-to-date increase of approximately 13% [18] - A 5.3% increase in the annual dividend payout rate was announced, marking the 30th consecutive increase [19] Q&A Session Summary Question: Demand trends in construction and infrastructure - Management noted continued strength in the Americas welding segment, with challenges in international markets [26] Question: Automation order rates and margin implications - Management indicated that while automation has higher fixed costs, an uptick in orders is expected to improve margins in the future [27][30] Question: Cycle positioning and demand recovery into 2026 - Management is cautiously optimistic about growth, emphasizing the need for consistent order activity before predicting a recovery [36][45] Question: Pricing dynamics and demand elasticity - Management observed that demand has been more resilient than expected, with volume trends starting to improve [42][43] Question: Volume expectations for the fourth quarter - Management expects traditional seasonality in the fourth quarter, with a modest sequential improvement in operating margins [55][56] Question: LIFO charges and accounting dynamics - Management clarified that LIFO accounting resets annually and that temporary cost savings will revert as volumes improve [59] Question: Harris Products Group pricing dynamics - Management explained that pricing is largely driven by commodity prices and market adjustments, with expectations for continued pricing strength [65]

Financial Performance Highlights - Net sales reached $1061.2 million, an increase of 7.9% year-over-year[8, 16] - Organic sales grew by 6%[8] - Adjusted EPS increased by 15% to $2.47[9, 16] - Cash flow from operations increased by 19% to $237 million, with a 149% cash conversion rate[8] - Returns to shareholders totaled $94 million, including $42 million in dividends and $53 million in share repurchases[11] Margin and Profitability - Adjusted operating income margin increased slightly by 10 bps to 17.4%[8, 16] - Adjusted ROIC performance increased by 80 bps to 22.2%[8] - Gross profit margin increased by 90 bps to 36.7%[16] Segment Performance - Americas Welding segment net sales increased by 8.6% year-over-year to $691.8 million[18] - International Welding segment net sales increased by 1.6% year-over-year to $219.6 million, with adjusted EBIT margin increasing by 230 bps to 11.3%[21] - The Harris Products Group net sales increased by 14.8% year-over-year to $149.8 million, with adjusted EBIT margin increasing by 190 bps to 18.3%[24] Sales Mix and End Sector Performance - Overall sales growth was driven by price increases of 7.8%, partially offset by a volume decrease of 2.2%[17] - Consumables sales increased by low-teens percent, while equipment sales increased by mid-single-digit percent[14] - Automation sales decreased by low double-digit percent[14] Full Year 2025 Assumptions - The company anticipates low-single-digit organic sales growth[37] - Expects a neutral price/cost environment[37] - Projects adjusted operating income margin to be steady to up slightly[37]

Core Insights - Lincoln Electric Holdings (LECO) reported quarterly earnings of $2.47 per share, exceeding the Zacks Consensus Estimate of $2.39 per share, and up from $2.14 per share a year ago [1][2] - The company achieved revenues of $1.06 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.91%, compared to $983.76 million in the same quarter last year [3] - The stock has increased approximately 25.1% year-to-date, outperforming the S&P 500's gain of 17.2% [4] Earnings Performance - The earnings surprise for the recent quarter was +3.35%, following a previous quarter surprise of +12.07% [2] - Over the last four quarters, Lincoln Electric has exceeded consensus EPS estimates three times [2] Revenue Performance - The company has topped consensus revenue estimates four times over the last four quarters [3] - Current consensus EPS estimate for the upcoming quarter is $2.56 on revenues of $1.08 billion, and for the current fiscal year, it is $9.71 on revenues of $4.22 billion [8] Industry Outlook - Lincoln Electric operates within the Manufacturing - Tools & Related Products industry, which is currently ranked in the top 30% of over 250 Zacks industries [9] - The industry has shown a strong correlation between near-term stock movements and trends in earnings estimate revisions [6] Future Expectations - The company's favorable estimate revisions trend prior to the earnings release has resulted in a Zacks Rank 2 (Buy), indicating expected outperformance in the near future [7] - The upcoming earnings report for Stanley Black & Decker (SWK), another company in the same industry, is anticipated to provide further context for industry performance [10][11]

Financial Performance - Third quarter 2025 net income was $122.6 million, or diluted EPS of $2.21, compared to $100.8 million, or $1.77 EPS in the prior year period, reflecting a 21.7% increase [2][3]. - For the nine months ended September 30, 2025, net income was $384.5 million, or $6.86 EPS, compared to $325.9 million, or $5.68 EPS in the prior year, marking an 18.0% increase [4][5]. - Adjusted net income for the nine months was $404.7 million, or $7.22 adjusted EPS, compared to $385.3 million, or $6.72 adjusted EPS in the prior year [4][5]. - Net income for Q3 2025 rose to $122,628 thousand, up from $100,756 thousand in Q3 2024, marking a growth of 21.7% [18]. - Net income for the nine months ended September 30, 2025, was $384,511, an increase of 17.9% compared to $325,879 in 2024 [27]. Sales and Revenue - Sales for the third quarter 2025 increased by 7.9% to $1,061.2 million, driven by a 5.6% increase in organic sales and a 1.7% contribution from acquisitions [3][7]. - Nine-month sales increased by 5.6% to $3,154.3 million, with organic sales growth of 2.4% and a 3.2% benefit from acquisitions [5][7]. - Total sales for the nine months ended September 30, 2025, reached $3,154,288, up from $2,986,639 in 2024, representing a growth of 5.6% [34]. - The Americas Welding segment reported net sales of $2,041,631 for the nine months ended September 30, 2025, compared to $1,910,061 in 2024, a growth of 6.9% [34]. - The International Welding segment's net sales for the nine months ended September 30, 2025, were $671,514, slightly down from $690,743 in 2024, a decrease of 2.8% [34]. - The Harris Products Group achieved net sales of $441,143 for the nine months ended September 30, 2025, up from $385,835 in 2024, an increase of 14.4% [34]. Operating Efficiency - Operating income margin improved to 16.6% in Q3 2025, up from 14.8% in the prior year, with adjusted operating income margin at 17.4% [3][7]. - Adjusted operating income for Q3 2025 was $184,562 thousand, compared to $169,756 thousand in Q3 2024, reflecting an increase of 8.4% [18]. - Cash conversion rate improved to 149% in Q3 2025 from 134% in Q3 2024, indicating enhanced operational efficiency [23]. - Average operating working capital to net sales improved to 18.6% in Q3 2025 from 16.9% in Q4 2024 [15]. - Total debt to invested capital ratio decreased to 46.7% from 48.7%, indicating improved capital efficiency [15]. - Return on invested capital as reported increased to 21.2% in 2025 from 19.7% in 2024 [21]. Cash Flow and Dividends - Cash flows from operations reached $237 million, achieving a cash conversion rate of 149% [7]. - The Board declared a quarterly cash dividend of $0.79 per share, representing a 5.3% increase from the previous dividend [6]. - The company returned $94 million to shareholders through dividends and share repurchases during the quarter [7]. - Cash dividends paid per share increased to $2.25 in 2025 from $2.13 in 2024, marking a rise of 5.6% [27]. - The company reported a net cash provided by operating activities of $566,208 for the nine months ended September 30, 2025, compared to $503,182 in 2024, an increase of 12.5% [27]. - The company experienced a net cash used by investing activities of $214,275 for the nine months ended September 30, 2025, compared to $335,357 in 2024, indicating a reduction in cash outflow of 36.1% [27]. Asset Management - Cash and cash equivalents decreased to $292,997 thousand from $377,262 thousand, a decline of approximately 22.4% [15]. - Total assets increased to $3,815,105 thousand, up from $3,520,142 thousand, representing a growth of about 8.4% [15]. - Capital expenditures for the nine months ended September 30, 2025, were $84,028, slightly down from $85,117 in 2024 [27]. Segment Performance - The Americas Welding segment's net sales increased by 6.9% due to acquisitions and price adjustments [38]. - The International Welding segment's net sales are projected to decline by 2.8% in 2025, despite a positive contribution from foreign exchange [38]. - The Harris Products Group is expected to see a significant growth of 14.3% in net sales for 2025, driven by volume and price increases [38]. - Overall, the consolidated net sales change was influenced by a volume decrease of $(82,635) and a price increase of $155,116 [38]. - Foreign exchange impacts were minimal, with a net change of $(191) across all segments [38]. - The company is focusing on strategic pricing and acquisitions to drive future growth across its segments [38].

Core Insights - Lincoln Electric reported a strong performance in Q3 2025, with net income of $122.6 million, or diluted EPS of $2.21, reflecting a year-over-year increase from $100.8 million, or $1.77 EPS in the prior year [1][4][21] - The company achieved adjusted net income of $137.2 million, or $2.47 adjusted EPS, compared to $122.4 million, or $2.14 adjusted EPS in the same quarter last year [1][21] - Sales for Q3 2025 increased by 7.9% to $1,061.2 million, driven by a 5.6% rise in organic sales and a 1.7% contribution from acquisitions [3][21] Financial Performance - Operating income for Q3 2025 was $176.7 million, representing 16.6% of sales, up from $145.6 million, or 14.8% of sales in the prior year [3][21] - Adjusted operating income was $184.6 million, or 17.4% of sales, compared to $169.8 million, or 17.3% of sales in the previous year [3][21] - For the nine months ended September 30, 2025, net income was $384.5 million, or $6.86 EPS, an increase from $325.9 million, or $5.68 EPS in the prior year [4][5][21] Cash Flow and Shareholder Returns - Cash flows from operations reached $237 million in Q3 2025, with a cash conversion rate of 149% [7][24] - The company returned $94 million to shareholders through dividends and share repurchases [7] - A quarterly cash dividend of $0.79 per share was declared, marking a 5.3% increase from the previous dividend [6][21] Balance Sheet Highlights - As of September 30, 2025, total assets were $3.82 billion, with total equity at $1.41 billion [14][22] - Cash and cash equivalents decreased to $293 million from $377 million at the end of 2024 [14][22] - Total debt was reported at $1.24 billion, with a total debt to invested capital ratio of 46.7% [14][22]

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1][9] Zacks Style Scores - Zacks Style Scores are indicators that help investors select stocks likely to outperform the market in the next 30 days, rated from A to F based on value, growth, and momentum characteristics [2][10] - The Value Score identifies attractive and discounted stocks using ratios like P/E and Price/Sales [3] - The Growth Score focuses on a company's financial strength and future outlook, analyzing projected and historical earnings and cash flow [4] - The Momentum Score helps investors capitalize on price trends, utilizing factors like weekly price changes and monthly earnings estimate changes [5] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for stock selection [6] Zacks Rank - The Zacks Rank is a proprietary model based on earnings estimate revisions, aiding investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.81% since 1988, significantly outperforming the S&P 500 [8] Stock Highlight: Lincoln Electric Holdings (LECO) - Lincoln Electric, headquartered in Cleveland, operates 56 manufacturing locations globally and specializes in welding and cutting products [12] - LECO holds a 2 (Buy) rating on the Zacks Rank and has a VGM Score of B, with a Momentum Style Score of A, reflecting a 2.5% increase in shares over the past four weeks [13][14] - Analysts have revised LECO's earnings estimate upwards for fiscal 2025, with the Zacks Consensus Estimate increasing by $0.09 to $9.71 per share, and an average earnings surprise of +10.6% [13]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Lincoln Electric Holdings (LECO) - Lincoln Electric Holdings currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned for potential outperformance in the market [3] Price Performance - Over the past week, LECO shares increased by 3.11%, while the Zacks Manufacturing - Tools & Related Products industry rose by 3.58% [5] - In a longer timeframe, LECO shares have risen by 8.42% over the past three months and 24.1% over the last year, outperforming the S&P 500, which increased by 7.07% and 16.3%, respectively [6] Trading Volume - The average 20-day trading volume for LECO is 284,814 shares, which serves as a useful indicator of price movement and market interest [7] Earnings Outlook - In the past two months, four earnings estimates for LECO have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $9.62 to $9.71 [9] - For the next fiscal year, four estimates have also moved higher without any downward revisions [9] Conclusion - Considering the strong momentum indicators and positive earnings outlook, LECO is identified as a 2 (Buy) stock with a Momentum Score of A, making it a promising candidate for near-term investment [11]