For Immediate Release Chicago, IL – August 5, 2024 – Today, Zacks Equity Research discusses Stanley Black & Decker, Inc. (SWK) and Lincoln Electric Holdings, Inc. (LECO) . Industry: Manufacturing Tools Link: https://www.zacks.com/commentary/2315124/2-manufacturing-tools-stocks-to-watch-despite-industryheadwinds Weakness in the manufacturing sector, slowdown in new orders and lingering effects of supply chain issues have marred the outlook of the Zacks Manufacturing-Tools & Related Products industry. The sho ...

Lincoln Electric Holdings, Inc. (LECO) reported adjusted earnings of $2.34 per share in the second quarter of 2024, beating the Zacks Consensus Estimate of $2.30. The bottom line decreased 4.1% year over year. Including one-time items, the bottom line was $1.77 per share compared with $2.36 in the prior-year quarter. Total revenues fell 3.7% year over year to $1.02 billion. However, the top line marginally beat the Zacks Consensus Estimate of $1.01 billion. The decline was due to a 4.4% fall in organic sale ...

Industry Overview - The Zacks Manufacturing-Tools & Related Products industry includes companies that develop and distribute various tools and technology solutions, serving multiple sectors such as industrial, commercial, oil & gas, and healthcare [3] - The industry is currently facing challenges due to weakness in the manufacturing sector, with the Manufacturing Purchasing Manager's Index at 46.8% in July, indicating contraction [4] Current Challenges - There is a persistent weakness in the manufacturing sector, with the New Orders Index also in contraction at 47.4% for four consecutive months [4] - Rising input costs and supply chain issues are negatively impacting profitability, leading to increased logistics expenses [5] Strategic Responses - Industry participants are focusing on cost-control measures and investments in product development to remain competitive [2] - Companies are implementing cost management initiatives, including streamlining operations and optimizing supply networks [5] Investment and Growth Potential - Continuous investment in product development and innovation is expected to drive long-term growth, despite the potential for highly-leveraged balance sheets [6] - Stanley Black & Decker, Inc. and Lincoln Electric Holdings, Inc. are highlighted as companies well-positioned to navigate current market challenges [2][11] Performance Metrics - The Zacks Manufacturing-Tools & Related Products industry has underperformed compared to the broader sector and the S&P 500, with a 7.6% appreciation over the past year versus 14.5% and 23% for the sector and S&P 500, respectively [9] - The industry is currently trading at a forward P/E ratio of 20.52X, slightly below the S&P 500's 21.49X but above the sector's 19.00X [10] Company Highlights - Stanley Black & Decker has shown resilience with better-than-expected results in the last four quarters and a 20.3% average earnings surprise [12] - Lincoln Electric is experiencing improving orders and strong backlogs, with a focus on automation solutions and new technologies [13][14]

Financial Performance - Net sales for the three months ended June 30, 2024, were $1,021,683, a decrease of 3.7% compared to $1,060,565 in the same period of 2023[74]. - Gross profit margin increased to 37.6% for the three months ended June 30, 2024, up from 35.2% in the prior year, driven by effective cost management[74][77]. - Operating income for the three months ended June 30, 2024, was $148,838, representing 14.6% of sales, down from 16.8% in the prior year[74][80]. - Net income for the three months ended June 30, 2024, was $101,708, a decrease of 25.9% from $137,331 in the same period of 2023[74]. - Diluted earnings per share for the three months ended June 30, 2024, were $1.77, down from $2.36 in the prior year, reflecting a 25.0% decline[74]. - For the six months ended June 30, 2024, net sales were $2,002,880, a decrease of 4.6% from $2,099,908 in the same period of 2023[76]. - Net income for the six months ended June 30, 2024, was $225,123, a decrease of 13.2% from $259,262 in 2023[88]. - Adjusted operating income for the three months ended June 30, 2024, was $177,622, compared to $184,225 for the same period in 2023, representing a decrease of 0.3%[94]. - Net income as reported for the six months ended June 30, 2024, was $225,123, down from $259,262 in the same period of 2023, a decline of 13.2%[94]. Segment Performance - Americas Welding net sales decreased to $648,936, a 4.1% decline compared to the previous year[83]. - International Welding net sales fell to $238,758, representing a 5.8% decrease year-over-year[83]. - The Harris Products Group achieved net sales of $133,989, reflecting a 2.9% increase compared to the same period last year[83]. - Adjusted EBIT for the Americas Welding segment was $136,651, a decrease of 2.3% from $139,870 in the prior year[85]. - Adjusted EBIT for the International Welding segment dropped to $25,709, a decline of 23.9% compared to the previous year[85]. - The Harris Products Group's adjusted EBIT increased by 27.7% to $24,923, up from $19,510 in the same quarter last year[85]. Expenses and Charges - SG&A expenses increased to $208,485 for the three months ended June 30, 2024, compared to $192,748 in the same period of 2023, primarily due to acquisitions and higher employee-related costs[74][78]. - Rationalization and asset impairment charges rose to $26,490 for the three months ended June 30, 2024, compared to $2,667 in the same period of 2023, primarily due to the disposal of the Company's Russian entity[74][79]. Tax and Effective Rates - The effective tax rate increased to 25.6% for the three months ended June 30, 2024, compared to 20.6% in the prior year, primarily due to a mix of earnings and discrete tax items[74][82]. Cash Flow and Investments - Cash provided by operating activities for the six months ended June 30, 2024, was $303,981, a decrease of 5.8% from $322,776 in the same period of 2023[99]. - Cash used by investing activities increased significantly to $(200,746) for the six months ended June 30, 2024, compared to $(76,346) in the same period of 2023, an increase of 162.5%[99]. - Cash and cash equivalents decreased by 30.8%, or $121,115, to $272,672 during the six months ended June 30, 2024, from $393,787 as of December 31, 2023[100]. - Average operating working capital to net sales increased to 18.0% as of June 30, 2024, compared to 17.1% as of December 31, 2023[101]. Capital and Debt Management - The company anticipates capital expenditures of $90,000 to $110,000 in 2024, focusing on maintenance and efficiency improvements[100]. - The company plans to fund global expansion primarily through operational cash flow, with potential access to capital markets for significant acquisitions[98]. - Total debt as of June 30, 2024, was $1,104,684, a decrease from $1,114,304 in 2023, reflecting a reduction of approximately 1%[103]. - Total equity increased to $1,312,906 as of June 30, 2024, compared to $1,201,424 in 2023, marking an increase of around 9%[103]. - The company reported a return on invested capital (ROIC) of 22.3% for the twelve months ended June 30, 2024, compared to 22.0% in 2023, showing a slight improvement[103]. - The company entered into a new $1 billion revolving credit facility on June 20, 2024, replacing a previous $500 million facility, with a maturity date of June 20, 2029[106]. - The company issued new senior unsecured notes totaling $550,000, with $400,000 issued on June 20, 2024, and two additional series of $75,000 each scheduled for August 22, 2024[107]. - The company terminated its existing interest rate swaps associated with a term loan, realizing a gain of $2,428 recorded in Other income (expense)[109]. - The company remains in compliance with all financial covenants related to its debt agreements as of June 30, 2024[107]. Future Outlook and Risks - The company experienced a decrease in volumes and operational inefficiencies, impacting overall performance negatively[89]. - Future outlook includes a focus on effective cost management and operational improvements to enhance profitability[86]. - The company anticipates potential risks including economic conditions, interest rates, and geopolitical events that may impact future operating results[110]. Long-term Performance - Net income for the twelve months ended June 30, 2024, was $511,110, compared to $477,633 for the same period in 2023, representing an increase of approximately 7%[103]. - Adjusted net operating profit after taxes for the twelve months ended June 30, 2024, was $573,360, up from $530,454 in 2023, indicating a growth of about 8%[103].

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) Lincoln Electric reported sales and net income declines in Q2 and H1 2024, maintaining stable adjusted operating margins amidst financing activities [Second Quarter 2024 Performance](index=1&type=section&id=Second%20Quarter%202024%20Performance) Q2 2024 Financial Performance | Financial Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,022.0 million | $1,060.6 million | -3.7% | | Net Income | $101.7 million | $137.3 million | -25.9% | | Diluted EPS | $1.77 | $2.36 | -25.0% | | Adjusted Net Income | $134.3 million | $142.2 million | -5.6% | | Adjusted EPS | $2.34 | $2.44 | -4.1% | | Operating Income Margin | 14.6% | 16.8% | -220 bps | | Adjusted Operating Income Margin | 17.4% | 17.4% | 0 bps | - The **3.7%** decrease in Q2 sales was driven by a **4.4%** decline in organic sales, which was partially offset by a **1.2%** benefit from acquisitions[3](index=3&type=chunk) - Management attributed the solid profit and earnings results to effective cost management and execution of strategic initiatives while navigating a challenging part of the cycle[4](index=4&type=chunk) - The company returned **$91 million** to shareholders during the quarter through dividends and share repurchases[7](index=7&type=chunk) [Six Months 2024 Performance](index=1&type=section&id=Six%20Months%202024%20Performance) H1 2024 Financial Performance | Financial Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,002.9 million | $2,099.9 million | -4.6% | | Net Income | $225.1 million | $259.3 million | -13.2% | | Diluted EPS | $3.91 | $4.44 | -11.9% | | Adjusted Net Income | $262.9 million | $266.5 million | -1.3% | | Adjusted EPS | $4.57 | $4.57 | 0.0% | | Operating Income Margin | 15.7% | 16.3% | -60 bps | | Adjusted Operating Income Margin | 17.4% | 16.8% | +60 bps | - The **4.6%** sales decrease for the first six months was primarily due to a **5.3%** decline in organic sales[6](index=6&type=chunk) [Financing Activities](index=2&type=section&id=Financing%20Activities) - On June 20, 2024, the company agreed to issue **$550 million** in new senior unsecured private placement notes with maturities ranging from 5 to 10 years[8](index=8&type=chunk) - Proceeds from the notes were used to repay a **$400 million** term loan. Once fully issued, total debt will be **$1.25 billion** with a weighted average effective interest rate of **4.08%**[8](index=8&type=chunk) - The company also entered into a new **$1 billion** revolving credit facility, with initial interest at SOFR plus **1.10%**[8](index=8&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show decreased net sales and income for Q2 and H1 2024, impacted by charges, with stable balance sheet and reduced operating cash flow [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2024 Consolidated Statements of Income | Metric (Q2) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,021.7 million | $1,060.6 million | -3.7% | | Gross Profit | $383.8 million | $373.4 million | +2.8% | | Operating Income | $148.8 million | $178.0 million | -16.4% | | Net Income | $101.7 million | $137.3 million | -25.9% | H1 2024 Consolidated Statements of Income | Metric (Six Months) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,002.9 million | $2,099.9 million | -4.6% | | Gross Profit | $752.2 million | $728.8 million | +3.2% | | Operating Income | $313.9 million | $342.4 million | -8.3% | | Net Income | $225.1 million | $259.3 million | -13.2% | - Rationalization and asset impairment charges significantly increased to **$26.5 million** in Q2 2024 from **$2.7 million** in Q2 2023, negatively impacting operating income[14](index=14&type=chunk) [Balance Sheet Highlights](index=5&type=section&id=Balance%20Sheet%20Highlights) Selected Balance Sheet Data | Selected Balance Sheet Data | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $272.7 million | $393.8 million | | Total assets | $3,415.2 million | $3,377.3 million | | Total debt | $1,104.7 million | $1,105.2 million | | Total equity | $1,312.9 million | $1,308.9 million | | Total debt / invested capital | 45.7% | 45.8% | - Average operating working capital as a percentage of Net sales increased to **18.0%** at the end of Q2 2024 from **17.1%** at the end of 2023[16](index=16&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q2 2024 Cash Flow Activities | Cash Flow Activity (Q2) | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $170.7 million | $198.8 million | | Net Cash used by Investing Activities | ($174.8 million) | ($60.3 million) | | Net Cash used by Financing Activities | ($93.1 million) | ($115.6 million) | | Decrease in Cash | ($102.3 million) | $21.7 million (Increase) | H1 2024 Cash Flow Activities | Cash Flow Activity (Six Months) | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $304.0 million | $322.8 million | | Net Cash used by Investing Activities | ($200.7 million) | ($76.3 million) | | Net Cash used by Financing Activities | ($218.5 million) | ($226.9 million) | | Decrease in Cash | ($121.1 million) | $23.3 million (Increase) | - For the first six months of 2024, the company spent **$160.8 million** on share repurchases and **$81.7 million** on cash dividends[29](index=29&type=chunk) [Segment Performance](index=10&type=section&id=Segment%20Performance) Segment performance varied in Q2 2024, with Americas Welding maintaining strong margins despite sales decline, International Welding facing significant drops, and Harris Products Group showing sales growth [Segment Highlights](index=10&type=section&id=Segment%20Highlights) Q2 2024 Segment Performance | Q2 2024 Segment Performance | Americas Welding | International Welding | Harris Products | | :--- | :--- | :--- | :--- | | Net Sales | $648.9 million | $238.8 million | $134.0 million | | % Change YoY | -4.1% | -5.8% | +2.9% | | Adjusted EBIT | $136.7 million | $25.7 million | $24.9 million | | Adjusted EBIT Margin | 19.9% | 10.4% | 18.2% | H1 2024 Segment Performance | Six Months 2024 Segment Performance | Americas Welding | International Welding | Harris Products | | :--- | :--- | :--- | :--- | | Net Sales | $1,273.0 million | $474.5 million | $255.3 million | | % Change YoY | -4.7% | -6.2% | -1.2% | | Adjusted EBIT | $272.8 million | $53.5 million | $44.8 million | | Adjusted EBIT Margin | 20.3% | 10.9% | 17.1% | - International Welding's Q2 reported EBIT was a loss of **$(5.5) million**, primarily due to **$26.3 million** in rationalization charges and a **$5.0 million** loss on asset disposal related to the disposition of its Russian entity[31](index=31&type=chunk)[33](index=33&type=chunk) [Change in Net Sales by Segment](index=12&type=section&id=Change%20in%20Net%20Sales%20by%20Segment) Q2 2024 Net Sales Change by Segment | Q2 2024 % Change in Net Sales vs. Q2 2023 | Volume | Acquisitions | Price | Foreign Exchange | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Americas Welding | (6.7)% | 1.8% | 1.0% | (0.2)% | (4.1)% | | International Welding | (3.8)% | 0.0% | (1.2)% | (0.8)% | (5.8)% | | The Harris Products Group | (1.9)% | — | 5.2% | (0.3)% | 2.9% | | **Consolidated** | **(5.4)%** | **1.2%** | **1.0%** | **(0.4)%** | **(3.7)%** | - Consolidated sales decline in Q2 was driven by a **5.4%** decrease in volume, partially offset by positive contributions from acquisitions (**1.2%**) and pricing (**1.0%**)[41](index=41&type=chunk) - The Harris Products Group was the only segment to post sales growth in Q2, driven by a strong **5.2%** price increase that more than offset a **1.9%** volume decline[41](index=41&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) The company provides detailed reconciliations of GAAP to non-GAAP measures, showing Q2 2024 adjusted EPS at **$2.34**, adjusted operating margin flat at **17.4%**, and adjusted ROIC improved to **23.7%** [Reconciliation of Operating Income, Net Income, and EPS](index=6&type=section&id=Reconciliation%20of%20Operating%20Income%2C%20Net%20Income%2C%20and%20EPS) Q2 2024 Reconciliation of Operating Income, Net Income, and EPS | Q2 2024 Reconciliation | Reported (GAAP) | Special Items (pre-tax) | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $148.8 million | $28.8 million | $177.6 million | | Net Income | $101.7 million | $32.6 million (after-tax) | $134.3 million | | Diluted EPS | $1.77 | $0.57 | $2.34 | - Q2 2024 pre-tax special items included **$26.5 million** in rationalization charges, **$2.2 million** in acquisition costs, and a **$5.0 million** loss on asset disposal[19](index=19&type=chunk) - The adjusted effective tax rate for Q2 2024 was **21.2%**, compared to the reported rate of **25.6%**[19](index=19&type=chunk) [Reconciliation of Return on Invested Capital (ROIC)](index=7&type=section&id=Reconciliation%20of%20Return%20on%20Invested%20Capital%20%28ROIC%29) Return on Invested Capital (TTM) | Return on Invested Capital (TTM) | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Reported ROIC | 22.3% | 22.0% | | Adjusted ROIC | 23.7% | 22.9% | - Adjusted net operating profit after taxes (NOPAT) for the twelve months ending June 30, 2024 was **$573.4 million**, an increase from **$530.5 million** in the prior year period[24](index=24&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) This section provides standard corporate information, including Lincoln Electric's business description and legal disclaimers regarding forward-looking statements and non-GAAP measures [About Lincoln Electric](index=2&type=section&id=About%20Lincoln%20Electric) - Lincoln Electric is described as the world leader in the engineering, design, and manufacturing of advanced arc welding solutions, automated joining, assembly and cutting systems[10](index=10&type=chunk) - The company operates **71** manufacturing and automation system integration locations across **21** countries and serves customers in over **160** countries[10](index=10&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) - The press release contains forward-looking statements that involve risks and uncertainties, and actual results may differ materially from expectations[12](index=12&type=chunk) - Key risk factors cited include general economic conditions, interest rates, currency exchange rates, tariff rates, and geopolitical events such as the Russia-Ukraine conflict[12](index=12&type=chunk)

Cyclical downturns can be a good time to look for quality names looking at depressed near-term results, and that would seem to apply to Lincoln Electric (NASDAQ:LECO). This leading player in welding and factory automation has seen basically all of its major markets slip into contraction and with higher rates, economic uncertainty, and nervousness around the election all in play, a recovery may not be in the works until sometime in 2025. Down almost 30% from its high, Lincoln is up about 10% since my last up ...

Lincoln Electric Holdings, Inc. (LECO) shares have lost 20.9% in the past three months compared with the industry's 10% decline. This mainly reflects escalating freight and material costs. Low volumes in the Harris Products Group add to the woes. Image Source: Zacks Investment Research High Costs, Weakness in Harris Products Group Ail Lincoln Electric is witnessing inflationary headwinds from escalating labor and raw material costs that impacted its margins. In addition, continued risks of possible supply-c ...

Lincoln Electric Holdings, Inc. (LECO) reported record first-quarter 2024 adjusted earnings of $2.23 per share, beating the Zacks Consensus Estimate of $2.15. Gains from effective cost management helped offset the impact of lower revenues, resulting in a 4.7% year-over-year increase in earnings.Including one-time items, the bottom line was $2.14 per share compared with $2.09 in the year-ago quarter.Total revenues declined 5.6% year over year to $981 million. The top line missed the Zacks Consensus Estimate ...

or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 Commission File Number: 0-1402 LINCOLN ELECTRIC HOLDINGS, INC. (Exact name of registrant as specified in its charter) Oh ...

For the quarter ended March 2024, Lincoln Electric Holdings (LECO) reported revenue of $981.2 million, down 5.6% over the same period last year. EPS came in at $2.23, compared to $2.13 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $1.04 billion, representing a surprise of -5.36%. The company delivered an EPS surprise of +3.72%, with the consensus EPS estimate being $2.15.While investors scrutinize revenue and earnings changes year-over-year and how they compare wit ...