Summary of Lincoln Electric (LECO) 2025 Conference Call Company Overview - **Company**: Lincoln Electric (LECO) - **Industry**: Welding and Automation - **Event**: 2025 Conference Call held on September 4, 2025 Key Points Current Market Environment - Customers are still deferring capital spending, maintaining a wait-and-see approach due to uncertainty in the market [4][5] - Resilience observed in North American markets and consumables business, indicating stability despite deferrals in automation and standard equipment orders [6][7] - The impact of Section 232 tariffs is being quantified, with a focus on maintaining a price-cost neutral posture [8][10] Business Performance - Heavy industries are operating below mid-cycle levels, with a volume decline of mid-teens compared to 2019, with expectations for growth not anticipated until 2026 [11][12] - Energy sector shows strong domestic and international activity, particularly in oil and gas, with good momentum expected to continue [14][15] - Consumables, which represent 52% of the business, are a key indicator of production levels and customer demand [19] Automation and Growth Strategy - Automation sales have increased significantly, from $400 million in 2020 to nearly $1 billion, with a focus on both organic and inorganic growth strategies [29][30] - The company is exploring acquisitions to diversify its automation business geographically and by end market [31][32] - High quoting activity is noted, but translating quotes into orders remains a challenge [35][36] Margin Performance - Margin performance has exceeded expectations, with automation margins more than doubling since 2020 [38][40] - The company is focused on both temporary and structural cost management strategies to maintain margins [39][56] - Harris segment has outperformed expectations, with EBIT margins improving significantly [50][52] Capital Deployment and Financial Strategy - The company emphasizes growth through internal investments and acquisitions, with a disciplined approach to capital allocation [61][62] - Share repurchases are being executed at the largest dollar amount since 2015, with a focus on maintaining a balance between growth investments and shareholder returns [63][64] - The target leverage ratio is set at 1.75 times EBITDA, with flexibility to increase for strategic acquisitions [66] Future Outlook - The company is optimistic about long-term growth trajectories in capital and production, with a focus on innovation and technology [70] - Key metrics for 2026 and beyond include top-line growth, operating margins, cash generation, and return on invested capital (ROIC) [67][68] Additional Insights - The company is exploring the use of AI for operational efficiency, although it is still in early stages [44][45] - The management's posture is to navigate through cycles while positioning for growth, indicating a strong foundation for future expansion [70] This summary encapsulates the key insights and strategic directions discussed during the Lincoln Electric conference call, highlighting the company's resilience, growth strategies, and focus on maintaining strong margins in a dynamic market environment.

Group 1 - Lincoln Electric Holdings (LECO) is outperforming its peers in the Industrial Products sector with a year-to-date return of 28.4% compared to the sector average of 6.7% [4] - The Zacks Consensus Estimate for LECO's full-year earnings has increased by 5% over the past three months, indicating improving analyst sentiment [4] - Lincoln Electric Holdings holds a Zacks Rank of 2 (Buy), suggesting a positive earnings outlook [3] Group 2 - Lincoln Electric Holdings is part of the Manufacturing - Tools & Related Products industry, which has an average year-to-date gain of 13.2%, further highlighting LECO's strong performance [6] - Life360 (LIF), another stock in the Industrial Products sector, has returned 107.4% year-to-date and has a Zacks Rank of 2 (Buy) [5] - The Security and Safety Services industry, where Life360 belongs, has seen a year-to-date increase of 19.5% [7]

Core Viewpoint - Lincoln Electric Holdings (LECO) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts raising earnings estimates [1][2]. Estimate Revisions - The upward trend in earnings estimate revisions reflects growing analyst optimism regarding Lincoln Electric's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, the earnings estimate is $2.31 per share, representing a year-over-year increase of +7.9%, with a 5.15% increase in the Zacks Consensus Estimate over the last 30 days [6]. - For the full year, the expected earnings are $9.52 per share, indicating a year-over-year change of +2.5% [7]. - The trend for the current year shows five estimates moving higher with no negative revisions, leading to a 5.2% increase in the consensus estimate [8]. Zacks Rank - Lincoln Electric has achieved a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates, which historically correlates with stock price outperformance [9]. - Stocks with Zacks Rank 1 and 2 have significantly outperformed the S&P 500, suggesting a favorable investment environment for Lincoln Electric [9]. Stock Performance - The stock has gained 6.9% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [10].

Core Viewpoint - Lincoln Electric Holdings (LECO) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Business Outlook - The upgrade reflects an improvement in Lincoln Electric's underlying business, suggesting that investors may respond positively by driving the stock price higher [5][10]. - For the fiscal year ending December 2025, Lincoln Electric is expected to earn $9.37 per share, with a 2.6% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7][9]. - The upgrade places Lincoln Electric in the top 5% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Company Overview - Lincoln Electric Holdings is the largest designer and manufacturer of arc welding and cutting products globally, founded in the late 1800s and listed on the Nasdaq exchange [1] Investment Focus - The analysis emphasizes a qualitative approach to investing, particularly in small-cap companies, seeking long-term compounders and special situations [1]

Company Overview - Lincoln Electric Holdings (LECO) currently has a Momentum Style Score of B, indicating a positive outlook based on recent price trends and earnings estimate revisions [3][12] - The company is recognized for manufacturing specialized welding products and other equipment, positioning it as a solid momentum pick [4][12] Performance Metrics - LECO shares have increased by 28.81% over the past quarter and 21.3% over the last year, significantly outperforming the S&P 500, which moved 11.66% and 15.86% respectively during the same periods [7] - Over the past week, LECO shares rose by 2.59%, while the Zacks Manufacturing - Tools & Related Products industry saw a slight increase of 2.9% [6] - The monthly price change for LECO is 11.49%, compared to the industry's performance of only 0.28% [6] Trading Volume - The average 20-day trading volume for LECO is 347,084 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - In the last two months, three earnings estimates for LECO have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $9.05 to $9.17 [10] - For the next fiscal year, three estimates have also moved upwards without any downward revisions, indicating a positive earnings outlook [10]

Group 1 - The stock of Lincoln Electric Holdings, Inc. (LECO) is experiencing significant attention due to high implied volatility in the options market, particularly the Sept 19, 2025 $310.00 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Lincoln Electric's stock price, potentially due to an upcoming event [2] - Lincoln Electric currently holds a Zacks Rank 2 (Buy) in the Manufacturing - Tools & Related Products Industry, which is in the top 19% of the Zacks Industry Rank, with recent analyst estimates for the current quarter increasing from $2.20 to $2.24 per share [3] Group 2 - The high implied volatility surrounding Lincoln Electric may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay, hoping the stock does not move as much as expected by expiration [4]

Group 1 - Lincoln Electric Holdings (LECO) is recognized as a cash-generative industrial leader specializing in welding consumables, equipment, and automation [1] - Since November 2024, LECO's stock has increased by 12%, and including all dividends paid, the total return is 13%, outperforming the S&P 500 index [1] - The company focuses on fundamental value drivers of business economics to identify high probability long-term investment opportunities [1] Group 2 - The company has a beneficial long position in its own shares, indicating confidence in its stock performance [2] - The article reflects the author's personal opinions and is not influenced by any compensation from external sources [2]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements, including income, comprehensive income, balance sheets, equity, and cash flows, are presented with detailed accounting notes Consolidated Statements of Income (Unaudited) Consolidated Statements of Income (Unaudited) - Three Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net sales | $1,088,673 | $1,021,683 | $66,990 | 6.6% | | Gross profit | $405,547 | $383,813 | $21,734 | 5.7% | | Operating income | $192,144 | $148,838 | $43,306 | 29.1% | | Net income | $143,396 | $101,708 | $41,688 | 41.0% | | Basic EPS | $2.58 | $1.79 | $0.79 | 44.1% | | Diluted EPS | $2.56 | $1.77 | $0.79 | 44.6% | | Cash dividends per share | $0.75 | $0.71 | $0.04 | 5.6% | Consolidated Statements of Income (Unaudited) - Six Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net sales | $2,093,061 | $2,002,880 | $90,181 | 4.5% | | Gross profit | $770,995 | $752,212 | $18,783 | 2.5% | | Operating income | $357,062 | $313,885 | $43,177 | 13.8% | | Net income | $261,883 | $225,123 | $36,760 | 16.3% | | Basic EPS | $4.69 | $3.96 | $0.73 | 18.4% | | Diluted EPS | $4.66 | $3.91 | $0.75 | 19.2% | | Cash dividends per share | $1.50 | $1.42 | $0.08 | 5.6% | [Consolidated Statements of Comprehensive Income (Unaudited)](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(UNAUDITED)) Consolidated Statements of Comprehensive Income (Unaudited) - Three Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net income | $143,396 | $101,708 | $41,688 | 41.0% | | Other comprehensive income (loss) | $60,255 | $(10,451) | $70,706 | -676.5% | | Comprehensive income | $203,651 | $91,257 | $112,394 | 123.2% | Consolidated Statements of Comprehensive Income (Unaudited) - Six Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net income | $261,883 | $225,123 | $36,760 | 16.3% | | Other comprehensive income (loss) | $89,478 | $(20,058) | $109,536 | -546.1% | | Comprehensive income | $351,361 | $205,065 | $146,296 | 71.3% | [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)) Condensed Consolidated Balance Sheets (Unaudited) - June 30, 2025 vs December 31, 2024 | Metric (in thousands) | June 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :----------- | :--------- | :--------- | | Total Current Assets | $1,725,226 | $1,645,281 | $79,945 | 4.9% | | TOTAL ASSETS | $3,727,369 | $3,520,142 | $207,227 | 5.9% | | Total Current Liabilities | $1,025,239 | $878,802 | $146,437 | 16.7% | | Total Liabilities | $2,347,756 | $2,192,709 | $155,047 | 7.1% | | Total Equity | $1,379,613 | $1,327,433 | $52,180 | 3.9% | [Consolidated Statements of Equity (Unaudited)](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20EQUITY%20(UNAUDITED)) Consolidated Statements of Equity (Unaudited) - Key Changes (in thousands) | Metric | Dec 31, 2024 | Mar 31, 2025 | June 30, 2025 | | :------------------------------------------ | :----------- | :----------- | :------------ | | Total Equity | $1,327,433 | $1,340,170 | $1,379,613 | | Net income (Q1 2025) | | $118,487 | | | Net income (Q2 2025) | | | $143,396 | | Cash dividends declared (Q1 2025) | | $(42,073) | | | Cash dividends declared (Q2 2025) | | | $(41,080) | | Purchase of shares for treasury (Q1 2025) | | $(106,694) | | | Purchase of shares for treasury (Q2 2025) | | | $(127,130) | Consolidated Statements of Equity (Unaudited) - Key Changes (in thousands) | Metric | Dec 31, 2023 | Mar 31, 2024 | June 30, 2024 | | :------------------------------------------ | :----------- | :----------- | :------------ | | Total Equity | $1,308,852 | $1,307,828 | $1,312,906 | | Net income (Q1 2024) | | $123,415 | | | Net income (Q2 2024) | | | $101,708 | | Cash dividends declared (Q1 2024) | | $(41,273) | | | Cash dividends declared (Q2 2024) | | | $(40,236) | | Purchase of shares for treasury (Q1 2024) | | $(110,405) | | | Purchase of shares for treasury (Q2 2024) | | | $(50,415) | [Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2025 vs 2024 | Cash Flow Activity (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Net cash provided by operating activities | $329,521 | $303,981 | $25,540 | 8.4% | | Net cash used by investing activities | $(79,470) | $(200,746) | $121,276 | 60.4% | | Net cash used by financing activities | $(317,709) | $(218,452) | $(99,257) | -45.4% | | Decrease in Cash and cash equivalents | $(77,781) | $(121,115) | $43,334 | 35.8% | | Cash and cash equivalents at end of period | $299,481 | $272,672 | $26,809 | 9.8% | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Detailed disclosures and explanations for the unaudited consolidated financial statements cover accounting policies, revenue recognition, EPS, acquisitions, segment reporting, rationalization, AOCI, inventories, leases, debt, income taxes, derivatives, fair value, and supplier financing programs - The financial statements are prepared in accordance with GAAP for interim information and do not include all disclosures required for complete annual statements[26](index=26&type=chunk) - Operating results for the six months ended June 30, 2025, are not necessarily indicative of the full year 2025[26](index=26&type=chunk) [NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%201%20%E2%80%94%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The Company adopted ASU No. 2023-09 (Income Taxes) as of January 1, 2025, requiring enhanced disclosures for rate reconciliation and income taxes paid, effective for the 2025 annual period[30](index=30&type=chunk) - The Company is evaluating ASU No. 2024-03 (Expense Disaggregation Disclosures) and ASU No. 2023-06 (Disclosure Improvements), with effective dates in 2027 and 2028, respectively, or upon SEC removal of requirements[32](index=32&type=chunk) [NOTE 2 — REVENUE RECOGNITION](index=10&type=section&id=NOTE%202%20%E2%80%94%20REVENUE%20RECOGNITION) Net Sales Disaggregated by Product Line (in thousands) | Product Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consumables | $594,646 | $546,421 | $1,115,249 | $1,074,159 | | Equipment | $494,027 | $475,262 | $977,812 | $928,721 | | Net sales | $1,088,673 | $1,021,683 | $2,093,061 | $2,002,880 | - Approximately **10% of the Company's Net sales** are recognized over time, particularly for automation products with multiple performance obligations[34](index=34&type=chunk) - Contract liabilities (advance customer payments and billings in excess of revenue) were **$96.245 million** at June 30, 2025, down from **$121.433 million** at December 31, 2024. Contract assets (revenue recognized but not yet invoiced) increased to **$98.319 million** at June 30, 2025, from **$81.781 million** at December 31, 2024[35](index=35&type=chunk) [NOTE 3 — EARNINGS PER SHARE](index=11&type=section&id=NOTE%203%20%E2%80%94%20EARNINGS%20PER%20SHARE) Basic and Diluted Earnings Per Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $2.58 | $1.79 | $4.69 | $3.96 | | Diluted EPS | $2.56 | $1.77 | $4.66 | $3.91 | - For the three months ended June 30, 2025, **27,376 common shares** subject to equity-based awards were excluded from diluted EPS computation due to anti-dilutive effect, compared to **25,472** in 2024[36](index=36&type=chunk) [NOTE 4 — ACQUISITIONS](index=11&type=section&id=NOTE%204%20%E2%80%94%20ACQUISITIONS) - On April 1, 2025, the Company acquired a **35% interest** in Alloy Steel Australia for approximately **$45 million**, with plans to acquire the remaining **65%** for **$90 million** by August 1, 2025. Alloy Steel specializes in maintenance and repair solutions for the mining sector[37](index=37&type=chunk) - In 2024, the Company completed three acquisitions: Vanair Manufacturing, LLC (mobile power solutions) for **$108.651 million** on July 30, 2024; Inrotech A/S (automated welding systems with AI software) for **$42.352 million** on June 3, 2024; and Superior Controls, LLC ("RedViking") (automation system integrator) for **$107.447 million** on April 1, 2024[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - Acquisition costs were **$1.231 million** for the six months ended June 30, 2025, compared to **$3.944 million** for the same period in 2024, expensed as incurred in SG&A[43](index=43&type=chunk) [NOTE 5 — SEGMENT INFORMATION](index=12&type=section&id=NOTE%205%20%E2%80%94%20SEGMENT%20INFORMATION) - The Company operates in three segments: Americas Welding, International Welding, and The Harris Products Group, focusing on arc welding products, automated systems, cutting equipment, and brazing/soldering alloys[44](index=44&type=chunk)[46](index=46&type=chunk) - Segment performance is primarily measured by Adjusted EBIT, which is Operating income plus Other income, adjusted for special items like rationalization and asset impairment charges[47](index=47&type=chunk) Adjusted EBIT by Segment (in thousands) - Three Months Ended June 30, 2025 vs 2024 | Segment | 2025 Adjusted EBIT | 2024 Adjusted EBIT | Change ($) | Change (%) | | :---------------------- | :----------------- | :----------------- | :--------- | :--------- | | Americas Welding | $137,915 | $136,651 | $1,264 | 0.9% | | International Welding | $30,550 | $25,709 | $4,841 | 18.8% | | The Harris Products Group | $31,884 | $24,923 | $6,961 | 27.9% | | Consolidated Adjusted EBIT | $199,149 | $181,019 | $18,130 | 10.0% | Adjusted EBIT by Segment (in thousands) - Six Months Ended June 30, 2025 vs 2024 | Segment | 2025 Adjusted EBIT | 2024 Adjusted EBIT | Change ($) | Change (%) | | :---------------------- | :----------------- | :----------------- | :--------- | :--------- | | Americas Welding | $262,113 | $272,750 | $(10,637) | -3.9% | | International Welding | $53,562 | $53,486 | $76 | 0.1% | | The Harris Products Group | $56,213 | $44,802 | $11,411 | 25.5% | | Consolidated Adjusted EBIT | $369,038 | $354,695 | $14,343 | 4.0% | [NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS](index=15&type=section&id=NOTE%206%20%E2%80%94%20RATIONALIZATION%20AND%20ASSET%20IMPAIRMENTS) - For the six months ended June 30, 2025, rationalization and asset impairment net charges totaled **$6.407 million**, impacting all three segments (Americas Welding: **$3.040 million**; International Welding: **$3.103 million**; The Harris Products Group: **$0.264 million**)[56](index=56&type=chunk) - In the prior year (six months ended June 30, 2024), charges were **$29.354 million** in International Welding, primarily due to the disposition of the Russian entity (**$22.566 million**), and **$1.396 million** in The Harris Products Group[56](index=56&type=chunk) - Rationalization liabilities decreased from **$14.146 million** at December 31, 2024, to **$6.416 million** at June 30, 2025, with payments and other adjustments of **$13.462 million** during the period[57](index=57&type=chunk)[58](index=58&type=chunk) [NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")](index=15&type=section&id=NOTE%207%20%E2%80%93%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)%20(%22AOCI%22)) Changes in AOCI by Component (in thousands) - Three Months Ended June 30, 2025 vs 2024 | Component | June 30, 2025 | June 30, 2024 | | :------------------------------------------------ | :------------ | :------------ | | Unrealized gain (loss) on derivatives | $18,257 | $17,490 | | Defined benefit pension plan activity | $(2,370) | $(1,917) | | Currency translation adjustment | $(226,544) | $(265,478) | | Total AOCI | $(210,657) | $(249,905) | - AOCI improved significantly, moving from a loss of **$(300.135) million** at December 31, 2024, to a loss of **$(210.657) million** at June 30, 2025, primarily driven by a positive currency translation adjustment of **$89.798 million** for the six months ended June 30, 2025[60](index=60&type=chunk) [NOTE 8 — INVENTORIES](index=16&type=section&id=NOTE%208%20%E2%80%94%20INVENTORIES) Inventory Components (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Raw materials | $159,154 | $153,596 | | Work-in-process | $131,368 | $123,406 | | Finished goods | $330,918 | $267,035 | | Total | $621,440 | $544,037 | - Approximately **35% of total inventories** were valued using the LIFO method at both June 30, 2025, and December 31, 2024[61](index=61&type=chunk) - The excess of current cost over LIFO cost increased to **$130.917 million** at June 30, 2025, from **$120.633 million** at December 31, 2024[61](index=61&type=chunk) [NOTE 9 — LEASES](index=17&type=section&id=NOTE%209%20%E2%80%94%20LEASES) Operating Lease Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Right-of-use assets | $53,206 | $54,276 | | Total lease liabilities | $53,956 | $55,234 | - Total lease expense for the six months ended June 30, 2025, was **$12.334 million**, slightly down from **$12.733 million** in the same period of 2024[62](index=62&type=chunk) - The weighted average remaining lease term is **6.2 years**, and the weighted average discount rate is **3.6%** as of June 30, 2025[63](index=63&type=chunk) [NOTE 10 — DEBT](index=18&type=section&id=NOTE%2010%20%E2%80%94%20DEBT) Debt Structure (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Long-term debt | $1,250,010 | $1,250,010 | | Total Short-term debt | $105,323 | $110,524 | | Total debt | $1,255,718 | $1,261,075 | - The Company's total weighted average effective interest rate for senior unsecured notes is **4.08%**, with a remaining weighted average tenure of **8.5 years** as of June 30, 2025[67](index=67&type=chunk) - The Company has a **$1 billion revolving credit facility** maturing in June 2029, with no outstanding borrowings as of June 30, 2025, and was in compliance with all debt covenants[68](index=68&type=chunk) [NOTE 11 — INCOME TAXES](index=19&type=section&id=NOTE%2011%20%E2%80%94%20INCOME%20TAXES) - The effective income tax rate for the six months ended June 30, 2025, was **22.2%**, lower than **23.7%** in the prior year, primarily due to the mix of earnings and timing of discrete tax items[71](index=71&type=chunk) - The recently enacted "One Big Beautiful Bill Act" (OBBBA) in the U.S. includes significant tax provisions effective from 2025 through 2027, which the Company is currently assessing for impact on its financial statements[72](index=72&type=chunk) [NOTE 12 — DERIVATIVES](index=20&type=section&id=NOTE%2012%20%E2%80%94%20DERIVATIVES) - The Company uses derivative instruments (foreign currency forward contracts, interest rate swaps) to manage exposures to currency exchange rates, interest rates, and commodity prices[73](index=73&type=chunk) - As of June 30, 2025, the gross notional amount of cash flow hedges (foreign currency) was **$93.502 million**, and net investment hedges (foreign currency) was **$380.099 million**. Undesignated foreign exchange forward contracts totaled **$427.439 million**[75](index=75&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - A gain of **$25.852 million** from terminated interest rate forward starting swap agreements in 2024 is being amortized to Interest expense, net over the life of the associated debt[76](index=76&type=chunk) [NOTE 13 - FAIR VALUE](index=21&type=section&id=NOTE%2013%20-%20FAIR%20VALUE) Fair Value of Assets and Liabilities (in thousands) - June 30, 2025 | Description | Balance as of June 30, 2025 | Level 1 | Level 2 | Level 3 | | :---------------------- | :-------------------------- | :------ | :------ | :------ | | **Assets:** | | | | | | Foreign exchange contracts | $8,068 | $0 | $8,068 | $0 | | Pension surplus | $21,327 | $21,327 | $0 | $0 | | **Liabilities:** | | | | | | Foreign exchange contracts | $3,381 | $0 | $3,381 | $0 | | Net investment contracts | $32,040 | $0 | $32,040 | $0 | | Deferred compensation | $54,016 | $0 | $54,016 | $0 | - Pension surplus assets are valued using Level 1 inputs (quoted market prices), while derivative contracts and deferred compensation liabilities are valued using Level 2 inputs (observable market data)[82](index=82&type=chunk)[83](index=83&type=chunk) [NOTE 14 – SUPPLIER FINANCING PROGRAM](index=22&type=section&id=NOTE%2014%20%E2%80%93%20SUPPLIER%20FINANCING%20PROGRAM) - Trade accounts payable included **$36.865 million** at June 30, 2025, and **$29.164 million** at December 31, 2024, related to suppliers participating in the financing program[86](index=86&type=chunk) - The program allows suppliers to factor receivables to a financial institution without affecting the Company's balance sheet classification of the payable[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis covers the Company's financial condition, operating results, segment performance, liquidity, and capital resources - The Company is the world's largest designer and manufacturer of arc welding and cutting products, with a global presence and three operating segments: Americas Welding, International Welding, and The Harris Products Group[89](index=89&type=chunk)[91](index=91&type=chunk) - The Company is monitoring the impact of U.S. government tariffs and retaliatory actions from trading partners, having taken steps to address initial trade policies[92](index=92&type=chunk) [General](index=23&type=section&id=General) - Lincoln Electric Holdings, Inc. is the world's largest designer and manufacturer of arc welding and cutting products, including equipment, consumables, and automated systems[89](index=89&type=chunk) - Products are sold globally through industrial distributors, retailers, and direct sales, organized into Americas Welding, International Welding, and The Harris Products Group segments[90](index=90&type=chunk)[91](index=91&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (in thousands) - Three Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net sales | $1,088,673 | $1,021,683 | $66,990 | 6.6% | | Gross profit | $405,547 | $383,813 | $21,734 | 5.7% | | Operating income | $192,144 | $148,838 | $43,306 | 29.1% | | Net income | $143,396 | $101,708 | $41,688 | 41.0% | | Diluted EPS | $2.56 | $1.77 | $0.79 | 44.6% | Consolidated Results of Operations (in thousands) - Six Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net sales | $2,093,061 | $2,002,880 | $90,181 | 4.5% | | Gross profit | $770,995 | $752,212 | $18,783 | 2.5% | | Operating income | $357,062 | $313,885 | $43,177 | 13.8% | | Net income | $261,883 | $225,123 | $36,760 | 16.3% | | Diluted EPS | $4.66 | $3.91 | $0.75 | 19.2% | [Net Sales](index=25&type=section&id=Net%20Sales) Net Sales Change Drivers - Three Months Ended June 30, 2025 vs 2024 (in thousands) | Driver | Change ($) | Change (%) | | :----------- | :--------- | :--------- | | Volume | $(23,847) | (2.3)% | | Price | $52,975 | 5.2% | | Acquisitions | $30,507 | 3.0% | | Foreign Exchange | $7,355 | 0.7% | | Total Net Sales Change | $66,990 | 6.6% | Net Sales Change Drivers - Six Months Ended June 30, 2025 vs 2024 (in thousands) | Driver | Change ($) | Change (%) | | :----------- | :--------- | :--------- | | Volume | $(61,448) | (3.1)% | | Acquisitions | $78,706 | 3.9% | | Price | $78,649 | 3.9% | | Foreign Exchange | $(5,726) | (0.2)% | | Total Net Sales Change | $90,181 | 4.5% | - The increase in net sales for both periods was primarily due to higher pricing (driven by input costs) and acquisitions, partially offset by lower volumes[95](index=95&type=chunk) [Gross Profit](index=25&type=section&id=Gross%20Profit) - Gross profit as a percentage of sales decreased by **0.3%** for the three months and **0.8%** for the six months ended June 30, 2025, compared to the prior year, primarily due to lower volumes, partially offset by higher operational efficiencies[96](index=96&type=chunk) - LIFO charges of **$8.523 million** and **$10.284 million** were recorded for the three and six months ended June 30, 2025, respectively, due to rising input costs, contrasting with LIFO benefits in the comparable 2024 periods[96](index=96&type=chunk) [Selling, General & Administrative ("SG&A") Expenses](index=25&type=section&id=Selling%2C%20General%20%26%20Administrative%20(%22SG%26A%22)%20Expenses) - SG&A expenses increased for both the three and six months ended June 30, 2025, primarily due to higher employee costs and acquisitions, partially mitigated by effective cost management[97](index=97&type=chunk) [Operating Income](index=25&type=section&id=Operating%20Income) - Operating income as a percentage of sales increased to **17.6%** for the three months ended June 30, 2025 (from **14.6%** in 2024), and to **17.1%** for the six months (from **15.7%** in 2024)[98](index=98&type=chunk) - Excluding special items, Adjusted operating income as a percentage of sales was **17.9%** for the three months (up from **17.4%**) and **17.4%** for the six months (flat YoY)[98](index=98&type=chunk) [Rationalization and Asset Impairment Net Charges](index=25&type=section&id=Rationalization%20and%20Asset%20Impairment%20Net%20Charges) - Charges in 2025 relate to rationalization plans across all three segments[99](index=99&type=chunk) - Charges in 2024 primarily stemmed from rationalization plans in International Welding, including the disposition of the Russian entity[99](index=99&type=chunk) [Income Taxes](index=26&type=section&id=Income%20Taxes) - The effective tax rate was lower for both the three and six months ended June 30, 2025 (**21.9%** and **22.2%** respectively), compared to the same periods in 2024 (**25.6%** and **23.7%**), mainly due to the mix of earnings and timing of discrete tax items[100](index=100&type=chunk) [Segment Results](index=26&type=section&id=Segment%20Results) Net Sales by Segment - Three Months Ended June 30, 2025 vs 2024 (in thousands) | Segment | 2025 Net Sales | 2024 Net Sales | Change ($) | Change (%) | | :------------------------ | :------------- | :------------- | :--------- | :--------- | | Americas Welding | $696,730 | $648,936 | $47,794 | 7.4% | | International Welding | $232,824 | $238,758 | $(5,934) | (2.5)% | | The Harris Products Group | $159,119 | $133,989 | $25,130 | 18.8% | Net Sales by Segment - Six Months Ended June 30, 2025 vs 2024 (in thousands) | Segment | 2025 Net Sales | 2024 Net Sales | Change ($) | Change (%) | | :------------------------ | :------------- | :------------- | :--------- | :--------- | | Americas Welding | $1,349,837 | $1,273,035 | $76,802 | 6.0% | | International Welding | $451,885 | $474,519 | $(22,634) | (4.8)% | | The Harris Products Group | $291,339 | $255,326 | $36,013 | 14.1% | - Americas Welding sales increased due to price and acquisitions, despite lower volumes. International Welding sales decreased due to lower volumes, partially offset by foreign exchange benefits. The Harris Products Group saw strong sales growth driven by volume and price[102](index=102&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk) - Adjusted EBIT for Americas Welding slightly increased for the three months but decreased for the six months due to lower volumes and acquisitions impact. International Welding's Adjusted EBIT increased for both periods due to effective cost management and improved operational efficiencies. The Harris Products Group showed significant Adjusted EBIT growth driven by higher organic sales and operational improvements[103](index=103&type=chunk)[105](index=105&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) - Non-GAAP measures are used to assess underlying operating performance by excluding special items like rationalization charges, acquisition costs, and asset impairment[106](index=106&type=chunk) Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures - Three Months Ended June 30, 2025 vs 2024 (in thousands, except per share) | Metric | 2025 GAAP | 2025 Adjusted | 2024 GAAP | 2024 Adjusted | | :-------------------------- | :-------- | :------------ | :-------- | :------------ | | Operating income | $192,144 | $195,115 | $148,838 | $177,622 | | Net income | $143,396 | $145,612 | $101,708 | $134,260 | | Adjusted EBIT | | $199,149 | | $181,019 | | Effective tax rate | 21.9% | 21.9% | 25.6% | 21.2% | | Diluted EPS | $2.56 | $2.60 | $1.77 | $2.34 | Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures - Six Months Ended June 30, 2025 vs 2024 (in thousands, except per share) | Metric | 2025 GAAP | 2025 Adjusted | 2024 GAAP | 2024 Adjusted | | :-------------------------- | :-------- | :------------ | :-------- | :------------ | | Operating income | $357,062 | $364,560 | $313,885 | $349,036 | | Net income | $261,883 | $267,468 | $225,123 | $262,916 | | Adjusted EBIT | | $369,038 | | $354,695 | | Effective tax rate | 22.2% | 22.3% | 23.7% | 21.6% | | Diluted EPS | $4.66 | $4.76 | $3.91 | $4.57 | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity sources are operating cash flows and revolving credit facilities. As of June 30, 2025, the Company had **$299.481 million** in cash and cash equivalents and **$5.319 million** in outstanding borrowings under its **$1.033 billion** revolving credit facilities[111](index=111&type=chunk) - Capital allocation priorities include internal investment for organic growth, strategic acquisitions, and returning capital to shareholders through dividends and share repurchases[112](index=112&type=chunk) [Overview](index=30&type=section&id=Overview) - The Company's liquidity is primarily derived from operating cash flows and revolving credit facilities, with **$299.481 million** in cash and cash equivalents and **$5.319 million** in outstanding borrowings as of June 30, 2025[111](index=111&type=chunk) - Capital allocation prioritizes internal investment for organic growth, strategic acquisitions, and shareholder returns via dividends and share repurchases[112](index=112&type=chunk) [Cash Flow](index=30&type=section&id=Cash%20Flow) Key Cash Flow Measures (in thousands) - Six Months Ended June 30, 2025 vs 2024 | Cash Flow Activity (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Cash provided by operating activities | $329,521 | $303,981 | $25,540 | 8.4% | | Cash used by investing activities | $(79,470) | $(200,746) | $121,276 | 60.4% | | Net cash used by financing activities | $(317,709) | $(218,452) | $(99,257) | -45.4% | | Decrease in Cash and cash equivalents | $(77,781) | $(121,115) | $43,334 | 35.8% | | Cash and cash equivalents at end of period | $299,481 | $272,672 | $26,809 | 9.8% | - Operating cash flow increased due to improved working capital. Investing cash flow improved significantly due to lower acquisition spending. Financing cash flow increased usage due to higher share repurchases[115](index=115&type=chunk)[116](index=116&type=chunk) - As of June 30, 2025, **$257.675 million** of the **$299.481 million** cash balance was held by international subsidiaries[115](index=115&type=chunk) [Revolving Credit Agreements](index=31&type=section&id=Revolving%20Credit%20Agreements) - The Company has a **$1 billion revolving credit facility**, maturing June 20, 2029, with full availability as of June 30, 2025, and no outstanding borrowings[119](index=119&type=chunk) - The facility bears interest at SOFR plus **1.10% to 1.60%** based on the net leverage ratio and includes financial covenants (max **3.5x EBITDA** net leverage, min **2.5x EBITDA** interest coverage), all of which were in compliance[68](index=68&type=chunk) [Working Capital Ratios](index=31&type=section&id=Working%20Capital%20Ratios) Working Capital Ratios | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :---------------- | :------------ | | Average operating working capital to Net sales | 18.4% | 16.9% | 18.0% | | Days sales in Inventories | 117.3 | 106.0 | 117.0 | | Days sales in Accounts receivable | 49.4 | 46.9 | 51.9 | | Average days in Trade accounts payable | 56.6 | 45.8 | 56.3 | [Stock Repurchase Program](index=31&type=section&id=Stock%20Repurchase%20Program) - As of June 30, 2025, **5.5 million shares** remained available under the **10 million share** repurchase program authorized on February 12, 2020[121](index=121&type=chunk) - Total shares purchased through the program were **4.5 million** at a cost of **$811.7 million** (weighted average **$181.33 per share**) through June 30, 2025[141](index=141&type=chunk) [Rationalization and Asset Impairments](index=31&type=section&id=Rationalization%20and%20Asset%20Impairments) - The Company expects rationalization actions to positively impact future operating results and not materially affect liquidity or capital[122](index=122&type=chunk) - Management continues to evaluate its cost structure, and additional rationalization actions may occur[58](index=58&type=chunk) [Acquisitions](index=31&type=section&id=Acquisitions) - The Company completed several acquisitions in 2024 and 2025, including a **35% interest** in Alloy Steel Australia in Q2 2025, and Vanair, Inrotech, and RedViking in 2024, expanding its portfolio in mobile power solutions, automated welding, and system integration[37](index=37&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[123](index=123&type=chunk) [Return on Invested Capital](index=31&type=section&id=Return%20on%20Invested%20Capital) - Adjusted ROIC, a non-GAAP measure, is used to evaluate financial performance. It is calculated as rolling 12 months of Adjusted net operating profit after taxes divided by invested capital[124](index=124&type=chunk) Return on Invested Capital (ROIC) - Twelve Months Ended June 30, 2025 vs 2024 | Metric | 2025 | 2024 | | :------------------------------------ | :------------ | :------------ | | Net operating profit after taxes | $538,920 | $540,063 | | Adjusted net operating profit after taxes | $571,869 | $573,360 | | Invested capital | $2,635,331 | $2,417,590 | | ROIC as reported | 20.4% | 22.3% | | Adjusted ROIC | 21.7% | 23.7% | [New Accounting Pronouncements](index=32&type=section&id=New%20Accounting%20Pronouncements) - The Company adopted ASU No. 2023-09 (Income Taxes) as of January 1, 2025, requiring enhanced disclosures for rate reconciliation and income taxes paid, effective for the 2025 annual period[30](index=30&type=chunk)[127](index=127&type=chunk) - The Company is evaluating ASU No. 2024-03 (Expense Disaggregation Disclosures) and ASU No. 2023-06 (Disclosure Improvements), with effective dates in 2027 and 2028, respectively, or upon SEC removal of requirements[32](index=32&type=chunk)[127](index=127&type=chunk) [Forward-looking Statements](index=32&type=section&id=Forward-looking%20Statements) - The report contains forward-looking statements subject to risks and uncertainties, including general economic conditions, commercial and operating initiatives, cybersecurity, divestitures, interest rates, credit market volatility, currency exchange rates, litigation, acquisition integration, commodity prices, regulatory complexity, tax law changes (including OBBBA), tariffs, and geopolitical conflicts[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure since December 31, 2024, with additional details in the Annual Report on Form 10-K - No material changes in market risk exposure have occurred since December 31, 2024[130](index=130&type=chunk) - Further details on market risk are available in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[130](index=130&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Company's management, including the CEO and CFO, evaluated and concluded that disclosure controls and procedures were effective as of June 30, 2025[131](index=131&type=chunk) [Changes in Internal Control Over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting during the quarter ended June 30, 2025[132](index=132&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The Company faces civil and administrative proceedings, including 1,236 asbestos-related cases as of June 30, 2025, with a net decrease of 25 claims - As of June 30, 2025, the Company was a co-defendant in approximately **1,236 asbestos-induced illness cases**, a net decrease of **25 claims** from the previous report[134](index=134&type=chunk) - Since January 1, 1995, **57,150 asbestos claims** against the Company were dismissed, **23** resulted in defense verdicts, and **1,020** were decided in favor of the Company via summary judgment motions[134](index=134&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Refer to the Annual Report on Form 10-K and prior Form 10-Q for a comprehensive discussion of the Company's risk factors - Readers should refer to "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and Form 10-Q for the quarter ended March 31, 2025, for a comprehensive discussion of risks[135](index=135&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common share repurchases in Q2 2025, with 648,399 shares bought at $196.06 average, leaving 5.5 million shares available Issuer Purchases of Common Shares - Second Quarter 2025 | Period | Total Shares Repurchased | Average Price Paid Per Share | Shares Repurchased as Part of Publicly Announced Plans or Programs | Maximum Shares Remaining Under Plans/Programs | | :----------------- | :----------------------- | :--------------------------- | :--------------------------------------------------------------- | :-------------------------------------------- | | April 1 - 30, 2025 | 99,975 | $179.96 | 99,248 | 6,071,177 | | May 1 - 31, 2025 | 311,506 | $191.49 | 310,448 | 5,760,729 | | June 1 - 30, 2025 | 236,918 | $208.86 | 236,488 | 5,524,241 | | Total | 648,399 | $196.06 | 646,184 | | - As of June 30, 2025, **5.5 million shares** remained available under the **10 million share** repurchase program authorized on February 12, 2020[121](index=121&type=chunk)[137](index=137&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to Lincoln Electric Holdings, Inc[138](index=138&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[139](index=139&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO and CFO certifications and various Inline XBRL documents - Exhibits include certifications from the CEO and CFO (31.1, 31.2, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[142](index=142&type=chunk) Signatures - The report was signed by Gabriel Bruno, Executive Vice President, Chief Financial Officer, and Treasurer, on July 31, 2025[146](index=146&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 7% sales growth driven by price management, M&A strategy, and improved volume performance [5][6] - Adjusted earnings per share increased by 11% to $2.60, with year-to-date cash flow generation exceeding 100% cash conversion of free cash flow [6][14] - Gross profit margin held steady at 37.3%, with a slight decline of 30 basis points year-over-year [14] Business Line Data and Key Metrics Changes - Americas Welding sales increased approximately 7%, driven by a 6.5% price increase and a 5% contribution from the Vanair acquisition [17] - International Welding segment sales declined by 2.5%, with a 4% favorable foreign exchange translation offset by a 7% drop in volumes [19] - Harris Products Group saw a 19% increase in sales, with 11% higher volumes primarily from the HVAC sector [20] Market Data and Key Metrics Changes - Three out of five end markets experienced growth, largely driven by price increases, with volume growth in general industries and energy sectors [10][11] - Heavy industries faced challenges but showed incremental improvement, while agricultural machinery OEMs are expected to recover in 2026 [11] - Construction infrastructure remained choppy, but organic sales were steady in the first half of the year [11] Company Strategy and Development Direction - The company is focused on maintaining a neutral price-cost position while managing inflationary pressures and supply chain complexities [5][12] - The acquisition of Alloy Steel is expected to enhance margins and earnings immediately upon closing [8][24] - The company aims to achieve approximately $60 million in savings from a six-quarter program, with a focus on permanent structural savings [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in July order trends, indicating strength in general industries and cautiousness in heavy industries [28] - The company anticipates low single-digit organic sales growth for the full year, with acquisitions contributing approximately 270 basis points to sales growth [24] - Management remains cautious about demand trends in the near term but optimistic about future growth as trade policies stabilize [40][41] Other Important Information - The company maintained a solid adjusted return on invested capital of 21.7% and returned $169 million to shareholders through dividends and share repurchases [22][23] - The company expects to see a steady operating income margin for the full year, with a high teens percent incremental margin [26] Q&A Session Summary Question: Can you elaborate on customer demand trends and orders? - Management noted that July order trends are holding strong, particularly in general industries, while heavy industries remain cautious [28] Question: What are the underlying organic demand trends in the Harris segment? - Excluding initial inventory stocking, volumes in the Harris segment are expected to be flattish as they progress into the third quarter [31] Question: How are customers responding to tariff clarity? - Management indicated that clarity around tariff rates is helping to alleviate the wait-and-see attitude among customers regarding capital investments [34] Question: What is the outlook for automation demand? - The automation business is expected to remain steady, with strong quoting activity but a conservative outlook on immediate order inflow [40][41] Question: What should be expected for pricing in Q3? - The company anticipates an additional 200 basis points of incremental pricing impact in Q3 due to actions taken in Q2 [64] Question: What factors influenced the reinstatement of incentive compensation? - The reinstatement was based on business performance and a reassessment of market conditions, as the volume response was better than initially feared [71]