Financial Performance - Net sales for 2024 were $4,008,670, a decrease of $182,966 or 4.4% compared to 2023's $4,191,636, primarily due to softer demand across all segments[116]. - Gross profit increased to $1,472,912, representing 36.7% of sales, up from 35.0% in 2023, driven by effective cost management and operational efficiencies[116][118]. - Operating income for 2024 was $636,462, or 15.9% of sales, down from 17.1% in 2023, with adjusted operating income at 17.6%[116][121]. - Net income decreased to $466,108, a decline of $79,140 or 14.5% from 2023's $545,248, with diluted earnings per share falling to $8.15 from $9.37[116]. - SG&A expenses rose to $780,590, accounting for 19.5% of sales, primarily due to acquisition-related costs[116][119]. - Rationalization and asset impairment net charges were $55,860 in 2024, significantly higher than the net gains of $36,187 in 2023[116][120]. - Adjusted EBIT for 2024 was $713,605, down $17,769 or 2.4% from $731,374 in 2023[127]. - Cash provided by operating activities decreased by $68,565 to $598,977 in 2024 compared to 2023[138]. - Cash used by investing activities increased significantly by $286,502 to $361,231 in 2024, primarily due to acquisitions[138]. - Return on invested capital (ROIC) as reported was 19.2% in 2024, down from 24.0% in 2023[154]. - Adjusted return on invested capital was 21.8% in 2024, compared to 24.1% in 2023[154]. Segment Performance - The Americas Welding segment reported net sales of $2,564,847, a decrease of 3.4% from 2023, while International Welding saw a 10.2% decline to $933,722[124]. - The Harris Products Group experienced a 2.8% increase in net sales to $510,101, attributed to price actions in response to higher commodity costs[124][125]. - Americas Welding segment net sales decreased by $90,699 or 3.4% to $2,564,847 in 2024[127]. - International Welding segment net sales decreased by $106,284 or 10.2% to $933,722 in 2024[127]. - The Harris Products Group saw an increase in net sales of $14,017 or 2.8% to $510,101 in 2024[127]. Tax and Liabilities - The effective tax rate increased to 21.6% in 2024 from 20.6% in 2023, influenced by the mix of earnings and discrete tax items[116][123]. - The Company had total liabilities of $55,425 for deferred compensation as of December 31, 2024[148]. - The Company had approximately $207,739 of gross deferred tax assets as of December 31, 2024[167]. - A valuation allowance of $35,284 was recorded against certain deferred tax assets based on realizability assessments[167]. Cash and Debt Management - As of December 31, 2024, the company had $377,262 in cash and cash equivalents and $10,520 in outstanding borrowings under its revolving credit facilities[134]. - Total debt outstanding as of December 31, 2024, was $1,261,075, including $110,524 in short-term debt[145]. - Total future minimum lease payments amounted to $61,942, with $14,896 classified as short-term lease obligations[146]. - The Company had total purchase commitments of $91,028 as of December 31, 2024, including $89,792 in current liabilities[147]. Risk Management - The Company manages financial market risks, including currency exchange rates, commodity prices, and interest rates, using derivative financial instruments[182]. - The gross notional dollar amount of foreign exchange contracts at December 31, 2024, was $96,444[186]. - A hypothetical 10% change in year-end exchange rates would have resulted in an increase or decrease to income before income taxes of $17,271 related to foreign exchange positions[187]. - A hypothetical 10% strengthening or weakening in the U.S. dollar would have changed accumulated other comprehensive income (loss) by $32,617[187]. - The notional dollar amount of a foreign currency forward contract hedge designated as a net investment hedge was $319,450 at December 31, 2024[187]. - The Company does not expect any counterparties to fail to meet their obligations, minimizing credit risk through investments with major banks[188]. Operational Investments - The company continues to invest in research and development to maintain its market-leading position and improve product quality and productivity[105]. - The company anticipates capital expenditures of $100,000 to $120,000 in 2025 for capacity and operational improvements[141]. - Average operating working capital to net sales decreased to 16.9% in 2024 from 17.1% in 2023[143]. - The excess of current cost over LIFO cost was $120,633 in 2024, down from $129,946 in 2023[170].

Core Viewpoint - Lincoln Electric Holdings, Inc. (LECO) reported strong adjusted earnings for Q4 2024, exceeding expectations, despite a decline in total revenues and organic sales [1][2][9]. Financial Performance - Adjusted earnings per share for Q4 2024 were $2.57, surpassing the Zacks Consensus Estimate of $2.00, representing a 4.9% year-over-year increase [1] - Including one-time items, earnings were $2.47 per share, down from $2.70 in the same quarter last year [2] - Total revenues decreased by 3.4% year-over-year to $1.02 billion, but exceeded the Zacks Consensus Estimate of $996 million [2][10] - Organic sales fell by 7.5%, while foreign exchange had a negative impact of 1.1%, partially offset by a 5.2% contribution from acquisitions [2] Costs and Margins - Cost of goods sold decreased by 5% year-over-year to $653 million, leading to a gross profit decline of 0.6% to $369 million [3] - Gross margin improved to 36.1% from 35.1% in the previous year [3] - Selling, general and administrative expenses fell by 1% to $187 million, while adjusted operating profit rose by 1.9% to $186 million, resulting in an adjusted operating margin of 18.2% [4] Segment Performance - Americas Welding segment saw a slight sales increase of 0.2% to $692 million, with adjusted operating income rising to $132 million [5] - International Welding segment experienced a significant revenue drop of 16.3% to $254 million, with adjusted operating profit decreasing to $33 million [6] - The Harris Products Group reported a strong performance with sales up 11.3% to approximately $127 million and adjusted operating profit increasing to $22 million [7] Cash Flow and Balance Sheet - Cash and cash equivalents at the end of 2024 were approximately $377 million, down from $394 million at the end of 2023 [8] - The company generated a record cash flow from operations of $599 million in 2024, compared to $668 million in 2023 [8] - Lincoln Electric returned $426 million to shareholders through dividends and share repurchases during the year [8] - Debt to invested capital ratio increased to 48.7% from 45.8% year-over-year [8] Annual Results - For the full year 2024, adjusted earnings per share were $9.29, a decrease of 1.3% from $9.41 in 2023, but above the Zacks Consensus Estimate of $8.72 [9] - Total revenues for 2024 fell by 4.4% to $4.01 billion, surpassing the Zacks Consensus Estimate of $3.98 billion [9][10] - The company faced a 6.5% decline in organic sales, while acquisitions contributed positively with a 2.5% increase [10] Stock Performance - Lincoln Electric's shares have declined by 6.4% over the past year, contrasting with a 1.6% growth in the industry [11]

Financial Data and Key Metrics Changes - The company achieved $4 billion in net sales for the full year, reflecting a 6.5% decline in organic sales but record profitability with a 17.6% adjusted operating income margin [9][10] - Adjusted earnings per share reached $9.29, with a strong cash flow generation of over 90% cash conversion [11][30] - Fourth-quarter sales declined 3% to $1.022 billion, primarily due to an 8.5% decrease in volumes, while pricing increased by 1% [18][20] Business Line Data and Key Metrics Changes - The automation portfolio generated $911 million in sales, on track to meet the $1 billion target for 2025 [10] - Americas Welding sales remained steady, with adjusted EBIT increasing 2% to $132 million, despite a 7% decline in volumes [25][26] - International Welding sales declined approximately 17%, with adjusted EBIT compressing 24% on lower sales [27][28] - Harris Products Group saw a 11% increase in sales, with adjusted EBIT rising 42% to $22 million [29] Market Data and Key Metrics Changes - Fourth-quarter organic sales performance reflected softer manufacturing activity across most end markets, particularly from large OEMs [15] - Retail channels continued to grow, while industrial distribution in the Americas showed resilience compared to a low double-digit decline in direct OEM sales [16] Company Strategy and Development Direction - The company is focused on achieving or exceeding targets across financial and sustainability metrics under its higher standard 2025 strategy [12] - The management emphasized a balanced capital allocation strategy, investing over $1.3 billion in growth while returning approximately $1.6 billion to shareholders [14] - The company plans to capitalize on growth opportunities and drive margin expansion in 2025, despite a cautious outlook for low single-digit sales growth [34][39] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges from deferred capital spending and manufacturing weakness but expressed optimism about a potential pickup in automation projects serving the automotive industry [15][17] - The company is preparing for low single-digit sales growth in 2025, with expectations of pressure on volumes in the first half of the year [34][36] - Management highlighted the importance of agility in navigating potential impacts from trade policies and tariffs [63][94] Other Important Information - The company achieved a 23% increase in returns to shareholders through a higher dividend payout rate and $264 million in share repurchases [11] - Cash flows from operations were $96 million for the fourth quarter and $599 million for the full year, with a 91% cash conversion ratio [30] Q&A Session Summary Question: Insights on welding business and competitive dynamics - Management highlighted differences in business models, particularly in automation, and noted that while organic growth has lagged competitors, they do not believe they are losing market share [43][50] Question: Guidance for first-quarter organic sales by segment - Management expects more pressure on volumes in the first half of the year, with low single-digit declines anticipated [51][52] Question: Outlook for organic sales growth by end markets - Management provided a high-level overview, indicating continued pressure in various sectors, including automotive and heavy industries, with expectations for some recovery later in the year [54][60] Question: Impact of tariffs on demand and customer sentiment - Management noted that customers are also awaiting clarity on tariff policies, which adds uncertainty to demand forecasts [92][94] Question: Automation order trends and growth expectations - Management indicated that long-cycle projects in automation are beginning to see renewed interest from existing customers, which is encouraging for future growth [70][112] Question: Cost savings and their impact on future demand - Management discussed permanent cost actions that will structurally shape the business and improve operating margins, while also noting temporary cost savings during the current down cycle [72][75]

February 13, 2025 LINCOLN ELECTRIC HOLDINGS, INC. Q4 & Full Year 2024 Earnings Safe Harbor and Regulation G Disclosures 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," " ...

Core Insights - Lincoln Electric reported an adjusted EPS of $2.57 for Q4 2024, surpassing analyst expectations of $1.99, while revenue was $1,022 million, exceeding the forecast of $992 million but down from $1,058.5 million in the previous year [2][3][6] Financial Performance - Adjusted EPS increased by 4.9% year-over-year from $2.45 in Q4 2023 [3] - Revenue decreased by 3.4% compared to Q4 2023, influenced by a 6.5% decline in organic sales [3][6] - Adjusted operating margin improved to 18.2%, up from 17.2% year-over-year, indicating effective cost management [3][6] - Net income fell by 10.5% year-over-year to $140.2 million, down from $156.6 million in Q4 2023 [3][7] Business Overview - Lincoln Electric specializes in welding products, industrial automation, and cutting equipment, with a focus on expanding its industrial automation segment, anticipating nearly $1 billion in revenue [4][8] - The company maintains a competitive edge through high-quality products, strong brand loyalty, and investment in technology and workforce [5] Challenges and Strategic Focus - The company faced challenges in organic sales and macroeconomic pressures, which affected overall revenue [6][7] - An acquisition contributed positively, offsetting some of the organic sales decline [8] - Looking ahead, Lincoln Electric expects continued sales pressures in Q1 2025 due to subdued industrial demand but remains optimistic about recovery through strategic cost management and innovative product launches [9]

Core Insights - Lincoln Electric Holdings (LECO) reported revenue of $1.02 billion for Q4 2024, a year-over-year decline of 3.5%, while EPS increased to $2.57 from $2.45 a year ago, exceeding consensus estimates for both revenue and EPS [1] Financial Performance - Revenue of $1.02 billion compared to Zacks Consensus Estimate of $995.94 million, resulting in a surprise of +2.62% [1] - EPS of $2.57 compared to consensus estimate of $2.00, delivering a surprise of +28.50% [1] - Shares returned +1% over the past month, underperforming the Zacks S&P 500 composite's +3.9% [3] Segment Performance - Net Sales for The Harris Products Group: $124.27 million, exceeding the average estimate of $113.42 million, representing a year-over-year change of +11.3% [4] - Net Sales for International Welding: $242.98 million, below the average estimate of $257.87 million, reflecting a year-over-year decline of -16.8% [4] - Net Sales for Americas Welding: $654.79 million, slightly above the estimated $632.30 million, with a year-over-year change of 0% [4] Total Sales Analysis - Total Sales for The Harris Products Group: $127.07 million, surpassing the average estimate of $114.65 million, with a year-over-year change of +11.3% [4] - Total Sales for International Welding: $254.21 million, below the average estimate of $262.98 million, indicating a year-over-year decline of -16.3% [4] - Total Sales for Americas Welding: $691.92 million, exceeding the estimated $657.33 million, with a year-over-year change of +0.3% [4] Inter-segment Sales - Inter-segment sales for Americas Welding: $37.13 million, above the average estimate of $33.67 million, representing a year-over-year change of +4.6% [4] - Inter-segment sales for International Welding: $11.23 million, exceeding the average estimate of $9.62 million, with a year-over-year change of -2.8% [4] - Inter-segment sales for The Harris Products Group: $2.80 million, slightly above the average estimate of $2.77 million, reflecting a year-over-year change of +8.7% [4] Adjusted EBIT - Adjusted EBIT for Americas Welding: $131.92 million, exceeding the average estimate of $112.85 million [4] - Adjusted EBIT for Corporate/Eliminations: $0.81 million, compared to an estimated -$1.81 million [4]

Company Performance - Lincoln Electric Holdings (LECO) reported quarterly earnings of $2.57 per share, exceeding the Zacks Consensus Estimate of $2 per share, and up from $2.45 per share a year ago, adjusted for non-recurring items [1] - The earnings surprise for this quarter was 28.50%, following a previous quarter where earnings were $2.14 against an expectation of $2.05, resulting in a surprise of 4.39% [2] - The company achieved revenues of $1.02 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.62%, although this represents a decline from year-ago revenues of $1.06 billion [3] Market Outlook - Lincoln Electric shares have increased approximately 3.5% since the beginning of the year, outperforming the S&P 500's gain of 2.9% [4] - The company's earnings outlook is mixed, with current consensus EPS estimates for the upcoming quarter at $2.11 on revenues of $982.75 million, and for the current fiscal year at $9.21 on revenues of $4.09 billion [8] Industry Context - The Manufacturing - Tools & Related Products industry, to which Lincoln Electric belongs, is currently ranked in the bottom 25% of over 250 Zacks industries, indicating potential challenges ahead [9]

Financial Performance - Fourth quarter 2024 net income was $140.2 million, or diluted EPS of $2.47, down from $156.6 million, or $2.70 EPS in the prior year[2] - Full year 2024 net income decreased to $466.1 million, or $8.15 EPS, compared to $545.2 million, or $9.37 EPS in 2023[5] - Fourth quarter 2024 sales decreased by 3.4% to $1,022.0 million, with a 7.5% decrease in organic sales and a 1.1% unfavorable foreign exchange impact[3] - Full year 2024 sales were $4,008.7 million, a decline of 4.4% from $4,191.6 million in 2023, driven by a 6.5% decrease in organic sales[6] - Operating income for the fourth quarter 2024 was $177.0 million, or 17.3% of sales, down from $204.0 million, or 19.3% of sales in the prior year[3] - Full year 2024 operating income was $636.5 million, or 15.9% of sales, compared to $717.8 million, or 17.1% of sales in 2023[6] - The company reported adjusted net income for 2024 of $531.3 million, a decrease of 3.0% from $547.9 million in the prior year[5] - Adjusted operating income for the full year 2024 was $704,390, down 2.0% from $718,787 in 2023, representing 17.6% of total sales[18] - Net income for Q4 2024 was $140,229, a decline of 10.4% compared to $156,644 in Q4 2023[18] - Adjusted net income for the full year 2024 was $531,265, a decrease of 3.0% from $547,922 in 2023[18] Cash Flow and Shareholder Returns - Cash flows from operations for 2024 totaled $599 million, with $426 million returned to shareholders through dividends and share repurchases[7] - Cash provided by operating activities for the full year 2024 was $598,977, a decrease of 10.3% from $667,542 in 2023[27] - Cash dividends paid per share increased to $2.84 in 2024 from $2.56 in 2023, reflecting a commitment to returning value to shareholders[27] Debt and Capital Structure - The company maintains a total debt to invested capital ratio of 48.7% as of December 31, 2024, up from 45.8% in the prior year[15] - Total debt increased to $1,261,075 in 2024 from $1,105,210 in 2023, reflecting a significant rise in financial leverage[22] Tax and Efficiency Metrics - The effective tax rate for the fourth quarter 2024 was 16.1%, compared to 20.5% in the prior year[13] - The effective tax rate for Q4 2024 was reported at 16.1%, down from 20.5% in Q4 2023[18] - The company reported a return on invested capital of 19.2% in 2024, down from 24.0% in 2023, indicating a decline in capital efficiency[22] Segment Performance - The Americas Welding segment reported net sales of $2,564,847 for the year ended December 31, 2024, down 3.4% from $2,655,546 in 2023[38] - The International Welding segment experienced a 10.2% decline in net sales, totaling $933,722 for the year ended December 31, 2024, compared to $1,040,006 in 2023[38] - The Harris Products Group saw a slight increase in net sales to $510,101 for the year ended December 31, 2024, up from $496,084 in 2023, marking a 2.8% growth[38] Future Outlook - Future outlook indicates a focus on market expansion and potential acquisitions to drive growth in the coming fiscal year[35]

The upcoming report from Lincoln Electric Holdings (LECO) is expected to reveal quarterly earnings of $2 per share, indicating a decline of 18.4% compared to the year-ago period. Analysts forecast revenues of $995.94 million, representing a decrease of 5.9% year over year.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted downward by 1.1% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.Bef ...

Company Overview - Lincoln Electric (NASDAQ: LECO) has a history dating back to 1895 and is known for its innovative welding technology and industrial solutions [1] Product and Market Focus - The company's product lineup is diverse and innovative, indicating a strong commitment to advancing welding technology [1] Investment Philosophy - The investment approach emphasizes finding opportunities that align with personality and analytical strengths, focusing on value investing principles [1] - The company acknowledges the difficulty of consistently beating the S&P 500 benchmark, leading to a strategy that includes a significant portion of the portfolio in index funds while selectively pursuing active investments [1] Analytical Approach - The analytical focus is on balance sheet strength from a credit perspective, near-term cash flow generation, next twelve-month earnings forecasts, and book value analysis, particularly for financial sector investments [1] Professional Background - The investment strategy is supported by over 10 years of professional experience in financial sector consulting, which aids in identifying overlooked opportunities [1]