Lincoln Electric Holdings (LECO) came out with quarterly earnings of $2.23 per share, beating the Zacks Consensus Estimate of $2.15 per share. This compares to earnings of $2.13 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.72%. A quarter ago, it was expected that this manufacturer of specialized welding products and other equipment would post earnings of $2.19 per share when it actually produced earnings of $2.45, deliver ...

Exhibit 99.1 Investor Relations: Amanda Butler (216) 383-2534 Amanda_Butler@lincolnelectric.com LINCOLN ELECTRIC REPORTS FIRST QUARTER 2024 RESULTS First Quarter 2024 Highlights CLEVELAND, Thursday, April 25, 2024 - Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported first quarter 2024 net income of $123.4 million, or diluted earnings per share (EPS) of $2.14, which includes special item after-tax net charges of $5.2 million, or $0.09 EPS. This compares with prior year period net i ...

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Part I [Business Overview](index=2&type=section&id=Item%201.%20Business) Lincoln Electric is a global leader in arc welding products and automated systems, operating through three segments and serving diverse industrial markets - The company is a world leader in arc welding products, automated systems, and cutting equipment, with a leading global position in brazing and soldering alloys[6](index=6&type=chunk) - The business operates through three segments: **Americas Welding**, **International Welding**, and **The Harris Products Group**[10](index=10&type=chunk) - Major end-user markets include general fabrication, energy, heavy industries, automotive/transportation, and construction/infrastructure[12](index=12&type=chunk) - Competition is based on brand preference, product quality, and service, with the company's highly trained technical sales force providing a competitive advantage[13](index=13&type=chunk)[14](index=14&type=chunk) - As of December 31, 2023, the company employed approximately **12,000** people worldwide[20](index=20&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant economic, operational, strategic, and legal risks, including sensitivity to economic cycles, supply chain disruptions, intense competition, and asbestos litigation - **Economic Risks:** Operating results are sensitive to economic cycles, inflation, interest rates, and global supply chain disruptions, including ongoing risks from the Russia-Ukraine conflict[38](index=38&type=chunk)[39](index=39&type=chunk) - **Operational Risks:** Risks include volatility in raw material and energy costs, disruptions from global events, and significant cybersecurity threats to information systems[44](index=44&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) - **Business Strategy Risks:** Challenges include integrating acquisitions, developing new products, protecting intellectual property, and intense global competition, including from low-cost foreign imports[51](index=51&type=chunk)[54](index=54&type=chunk)[58](index=58&type=chunk) - **Legal and Compliance Risks:** The company is a co-defendant in approximately **1,387** asbestos-induced illness lawsuits as of December 31, 2023, and faces product liability, tax law, and environmental regulation risks[62](index=62&type=chunk)[66](index=66&type=chunk)[70](index=70&type=chunk)[73](index=73&type=chunk) [Cybersecurity](index=20&type=section&id=Item%201C.%20Cybersecurity) The company integrates cybersecurity into its ERM process, employing assessments and training, with Board oversight and an experienced CIO managing these critical risks - Cybersecurity risk management is integrated into the company's Enterprise Risk Management (ERM) process and is considered a **critical risk**[81](index=81&type=chunk) - The company employs third-party assessments, penetration testing, and biannual employee training to manage and mitigate cybersecurity risks[82](index=82&type=chunk)[83](index=83&type=chunk) - The Board's Audit Committee oversees cybersecurity risks, receiving regular updates from the Chief Information Officer (CIO), with the full Board receiving an annual update[86](index=86&type=chunk) - To date, no cybersecurity incidents have had a **material impact** on the business or operations[84](index=84&type=chunk) [Information About Our Executive Officers](index=22&type=section&id=Item%201D.%20Information%20About%20Our%20Executive%20Officers) This section lists the company's executive officers, including their age and professional history, highlighting key leadership roles Executive Officers as of January/February 2024 | Name | Age | Position | | :--- | :--- | :--- | | Christopher L. Mapes | 62 | Executive Chairman of the Board | | Steven B. Hedlund | 57 | President and Chief Executive Officer | | Gabriel Bruno | 56 | Executive Vice President, Chief Financial Officer and Treasurer | | Jennifer I. Ansberry | 50 | Executive Vice President, General Counsel and Secretary | | Michele R. Kuhrt | 57 | Executive Vice President, Chief Human Resources Officer | | Lisa A. Dietrich | 51 | Executive Vice President, Chief Information Officer | [Properties](index=24&type=section&id=Item%202.%20Properties) The company's corporate headquarters are in Cleveland, Ohio, with 71 manufacturing and automation facilities globally across 21 countries, most of which are owned - Corporate headquarters and principal U.S. manufacturing facilities are in Cleveland, Ohio, with approximately **3.0 million square feet** of space[92](index=92&type=chunk) - The company has **71** manufacturing and automation system integration facilities across **21** countries[94](index=94&type=chunk) - Significant manufacturing locations are listed by operating segment, including facilities in the United States, Brazil, Canada, Mexico, China, Germany, Italy, and the United Kingdom[94](index=94&type=chunk) - In March 2022, the company ceased operations in Russia in response to the invasion of Ukraine[94](index=94&type=chunk) [Legal Proceedings](index=26&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, primarily asbestos-related lawsuits, with a strong record of successful defense and dismissals for thousands of claims - As of December 31, 2023, the company was a co-defendant in approximately **1,387** asbestos-induced illness lawsuits, a net decrease of **22** claims from the prior report[97](index=97&type=chunk) - Since January 1, 1995, **56,986** asbestos-related claims have been dismissed, **23** tried to defense verdicts, and **1,015** decided in the company's favor on summary judgment motions[97](index=97&type=chunk) Part II [Market for Common Equity, Stockholder Matters, and Equity Purchases](index=26&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on NASDAQ under 'LECO,' with 2,214 record holders and significant share repurchases in Q4 2023 - The company's common shares are traded on The NASDAQ Global Select Market under the symbol **"LECO"**[99](index=99&type=chunk) Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Plans | Maximum Shares that May Yet be Purchased | | :--- | :--- | :--- | :--- | :--- | | Oct 1 - 31, 2023 | 100,749 | $179.12 | 98,253 | 8,107,766 | | Nov 1 - 30, 2023 | 132,659 | $188.51 | 132,617 | 7,975,149 | | Dec 1 - 31, 2023 | 120,132 | $209.13 | 116,629 | 7,858,520 | | **Total** | **353,540** | **$192.84** | **347,499** | | - On February 12, 2020, the Board authorized a share repurchase program for up to **10 million** shares, with **2.1 million** shares purchased through December 31, 2023[100](index=100&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported strong 2023 financial performance with Net Sales of **$4.19 billion** and Net Income of **$545.2 million**, driven by acquisitions and volume growth, alongside robust operating cash flow and a healthy balance sheet [Results of Operations](index=30&type=section&id=Results%20of%20Operations) In 2023, Net Sales grew **11.4%** to **$4.19 billion**, driven by acquisitions and volume, leading to improved gross margin and significant increases in operating income and net income Consolidated Results of Operations (Year Ended Dec 31) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,191.6M | $3,761.2M | 11.4% | | Gross Profit | $1,465.4M | $1,280.8M | 14.4% | | Gross Profit % | 35.0% | 34.1% | +0.9 ppt | | Operating Income | $717.8M | $612.3M | 17.2% | | Net Income | $545.2M | $472.2M | 15.5% | | Diluted EPS | $9.37 | $8.04 | 16.5% | Change in Net Sales (2023 vs. 2022) | Component | % Change | | :--- | :--- | | Volume | 2.3% | | Acquisitions | 7.4% | | Price | 1.7% | | Foreign Exchange | 0.1% | | **Total Net Sales Change** | **11.4%** | [Segment Results](index=32&type=section&id=Segment%20Results) In 2023, Americas Welding and International Welding segments reported strong Net Sales growth, while The Harris Products Group declined; all segments achieved higher Adjusted EBIT margins Net Sales % Change by Segment (2023 vs. 2022) | Segment | Volume | Acquisitions | Price | FX | Total Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Americas Welding | 4.8% | 9.7% | 1.6% | (0.1)% | 16.0% | | International Welding | 1.3% | 5.7% | 1.5% | 0.5% | 9.0% | | The Harris Products Group | (7.1)% | 0.0% | 2.4% | 0.5% | (4.2)% | Adjusted EBIT by Segment (Year Ended Dec 31) | Segment | 2023 Adjusted EBIT | 2022 Adjusted EBIT | % Change | 2023 Margin | 2022 Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Americas Welding | $538.3M | $462.8M | 16.3% | 19.3% | 19.2% | | International Welding | $136.5M | $120.2M | 13.6% | 12.7% | 12.2% | | The Harris Products Group | $74.1M | $64.0M | 15.8% | 14.6% | 12.1% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company significantly improved liquidity in 2023, with operating cash flow increasing to **$667.5 million**, reduced investing outflows, and managed debt effectively, anticipating **$90-110 million** in 2024 capital expenditures Key Cash Flow Measures (Year Ended Dec 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Cash provided by operating activities | $667.5M | $383.4M | | Cash used by investing activities | ($74.7M) | ($504.7M) | | Cash (used by) provided by financing activities | ($412.4M) | $133.7M | | Increase in Cash and cash equivalents | $196.6M | $4.2M | - The increase in operating cash flow was primarily due to increased earnings and improved working capital[141](index=141&type=chunk) - Total debt outstanding was **$1.105 billion** at year-end 2023, down from **$1.204 billion** at year-end 2022[146](index=146&type=chunk) - Anticipated capital expenditures for 2024 are projected to be between **$90 million** and **$110 million**[141](index=141&type=chunk) - In January 2024, the company paid a cash dividend of **$0.71 per share**, an **11% increase** in the payout rate[140](index=140&type=chunk) [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on critical accounting policies and estimates, including legal and tax contingencies, deferred income taxes, inventory valuation, impairment testing, business acquisitions, and revenue recognition - **Legal and Tax Contingencies:** Management estimates probable costs for litigation, including asbestos claims, and maintains liabilities for uncertain tax positions[171](index=171&type=chunk)[173](index=173&type=chunk) - **Deferred Income Taxes:** The company assesses the realizability of deferred tax assets by projecting future taxable income, recording a **$36.9 million** valuation allowance at year-end 2023[176](index=176&type=chunk)[178](index=178&type=chunk) - **Inventories:** A substantial portion of U.S. inventories (**37%** of total) is valued using the **LIFO method**, requiring estimates of year-end inventory levels and costs[179](index=179&type=chunk) - **Goodwill and Intangibles:** Annual impairment tests for goodwill and indefinite-lived intangibles involve estimating fair values using discounted cash flow models based on future growth and discount rate assumptions[182](index=182&type=chunk)[184](index=184&type=chunk) - **Revenue Recognition:** Most revenue is recognized at a point in time, but customized automation projects are accounted for over time, requiring estimates of total costs to complete[187](index=187&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks from foreign currency, commodity prices, and interest rates using derivatives, with sensitivity analysis indicating manageable impacts from hypothetical changes - Primary financial market risks include fluctuations in currency exchange rates, commodity prices, and interest rates[190](index=190&type=chunk) - **Foreign Currency Risk:** Forward contracts hedge transactions and intercompany loans; a hypothetical **10%** change in exchange rates on non-designated hedges would impact pre-tax income by **$25.3 million**, offset by underlying balance sheet exposure[194](index=194&type=chunk)[196](index=196&type=chunk) - **Interest Rate Risk:** Interest rate swaps manage variability; a hypothetical **100 basis point** increase in variable rates would increase annual Interest Expense by approximately **$2.5 million**[198](index=198&type=chunk) - **Commodity Price Risk:** Hedging arrangements manage price risk for commodity purchases, with a notional amount of **200,000 pounds** at year-end 2023[197](index=197&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2023[203](index=203&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2023, based on the **2013 COSO framework**[204](index=204&type=chunk) - The effectiveness of internal control over financial reporting was audited by Ernst & Young LLP, which issued an **unqualified opinion**[205](index=205&type=chunk) Part III [Items 10-14](index=58&type=section&id=Items%2010-14) Information for Items 10 through 14, covering directors, executive compensation, and related matters, is incorporated by reference from the company's 2024 definitive proxy statement - Information for Items **10, 11, 12, 13, and 14** is incorporated by reference from the registrant's **2024 definitive proxy statement**[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=58&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits included in the Form 10-K, covering consolidated financial data, auditor reports, and key corporate documents - This section lists the financial statements filed with the report, including Consolidated Statements of Income, Comprehensive Income, Balance Sheets, Equity, and Cash Flows for the years ended **December 31, 2023, 2022, and 2021**[214](index=214&type=chunk) - Financial Statement Schedule II – Valuation and Qualifying Accounts is also included[215](index=215&type=chunk) - A comprehensive list of exhibits is provided, including credit agreements, note purchase agreements, equity and compensation plans, and executive officer certifications[217](index=217&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=65&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued unqualified opinions on the company's consolidated financial statements and internal control over financial reporting, identifying goodwill impairment evaluation as a Critical Audit Matter - The auditor, Ernst & Young LLP, issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[230](index=230&type=chunk)[238](index=238&type=chunk) - A **Critical Audit Matter** was identified related to the goodwill impairment evaluation for a reporting unit in the Americas Welding segment, due to the complex and judgmental nature of estimating fair value sensitive to assumptions like weighted average cost of capital and terminal growth rate[235](index=235&type=chunk) [Consolidated Financial Statements](index=69&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show consistent growth in Net Sales and Net Income, with Total Assets reaching **$3.38 billion** and robust operating cash flow of **$667.5 million** in 2023 Consolidated Income Statement Highlights (in thousands) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Sales | $4,191,636 | $3,761,211 | $3,234,180 | | Operating Income | $717,849 | $612,336 | $461,669 | | Net Income | $545,248 | $472,224 | $276,580 | | Diluted EPS | $9.37 | $8.04 | $4.60 | Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $1,693,111 | $1,557,790 | | Total Assets | $3,377,297 | $3,180,546 | | Total Current Liabilities | $754,610 | $852,897 | | Total Liabilities | $2,068,445 | $2,146,505 | | Total Equity | $1,308,852 | $1,034,041 | Consolidated Cash Flow Highlights (in thousands) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $667,542 | $383,386 | $365,063 | | Net Cash from Investing Activities | ($74,729) | ($504,691) | ($205,356) | | Net Cash from Financing Activities | ($412,392) | $133,725 | ($221,940) | [Notes to Consolidated Financial Statements](index=74&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial data, covering acquisitions, goodwill, debt, pensions, and income taxes - **Acquisitions (Note 4):** The company acquired **Powermig** in Brazil for **$29.6 million** in May 2023, and **Fori Automation** for **$427 million** in December 2022, expanding automation capabilities and automotive market presence[312](index=312&type=chunk)[313](index=313&type=chunk) - **Goodwill (Note 5):** As of December 31, 2023, goodwill totaled **$694.5 million**, with **$497.6 million** allocated to the Americas Welding segment, primarily due to the Powermig and Fori acquisitions[324](index=324&type=chunk) - **Debt (Note 9):** Total debt was **$1.105 billion** at year-end 2023, primarily Senior Unsecured Notes (**$702.8 million** net) and a **$400 million** Term Loan, with the company in compliance with all debt covenants[343](index=343&type=chunk) - **Pensions (Note 11):** The company maintains defined benefit and contribution plans; U.S. defined benefit plans had an **$8.4 million** deficit, and non-U.S. plans had a **$34.8 million** deficit at year-end 2023[366](index=366&type=chunk) - **Income Taxes (Note 13):** The effective tax rate for 2023 was **20.6%**, with gross deferred tax assets of **$172.7 million** and a valuation allowance of **$36.9 million** recorded[385](index=385&type=chunk)[388](index=388&type=chunk)

Q4 & Full Year 2023 Earnings 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," "will," "expect," "intend," "estimate," "anticipate," "believe," "forecast," "guidance" or words of similar meaning. For ...

Financial Performance - Q3 2023 net sales increased by 10.5% year-over-year to $1033.2 million[10], compared to $935.2 million in Q3 2022[10] - Q3 2023 adjusted operating income increased by 19.7% year-over-year to $183.4 million[10], representing 17.7% of sales[10], compared to $153.2 million in Q3 2022, which was 16.4% of sales[10] - Q3 2023 adjusted diluted EPS increased by 17.6% year-over-year to $2.40[10], compared to $2.04 in Q3 2022[10] - The company returned $82 million to shareholders through dividends and share repurchases[7] - Q3 2023 cash flow from operations increased by 71% year-over-year[27] Segment Performance - Americas Welding segment net sales increased by 13.6% year-over-year[32] - International Welding segment net sales increased by 11.8% year-over-year[36] - The Harris Products Group net sales decreased by 5.4% year-over-year[21] Sales Trends - Q3 organic sales increased by 0.4%[7], but were negatively impacted by approximately 230 bps due to fewer shipping days[8] - Equipment sales were up mid-single digit percent[8] - Consumables sales were down low-single digit percent in HPG (HVAC)[8] Market Performance - Energy sector sales were up mid-teens percent[8] - Heavy Industries sector sales were up mid-to-high single digit percent[8] - Automotive sector sales declined mid-teens percent[8] Outlook - The company anticipates low-double digit percent sales growth for the full year 2023, with mid-single digit percent organic sales growth[47]

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 September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number: 0-1402 LINCOLN ELECTRIC HOLDINGS, INC. (Exact name of registrant as specified in its charter ...

Financial Data and Key Metrics Changes - The company reported a consolidated second quarter sales increase of 9% to $1.061 billion, driven by a 5.2% benefit from acquisitions and a 3.6% increase in volumes [30][31] - Gross profit dollars increased approximately 12% or $40 million year-over-year, with a gross profit margin increase of 80 basis points to 35.2% [18][30] - Adjusted operating income increased 10% to $184 million, with an adjusted operating income margin of 17.4% [31][32] - The adjusted return on invested capital (ROIC) was maintained at 22.9%, with $90 million returned to shareholders in the quarter [12][57] Business Line Data and Key Metrics Changes - The Americas Welding segment's adjusted EBIT increased approximately 19% to $140 million, with an adjusted EBIT margin of 19.8% [20][55] - The Industrial Welding segment's adjusted EBIT decreased 3.5% to $34 million, but improved sequentially by 150 basis points [21] - The Harris Products Group's adjusted EBIT increased approximately 9% to $19.5 million, with an adjusted EBIT margin of 14.7% [34] Market Data and Key Metrics Changes - Strong growth was observed in the energy sector, particularly in midstream activities, while automotive transportation faced a decline due to timing issues [27][15] - General industry sales growth was strong in the U.S., but there was softness in Europe and retail sectors [40][41] - International Welding achieved a 4% volume growth despite macroeconomic challenges in Europe [103] Company Strategy and Development Direction - The company is focused on advancing its automation portfolio, with expectations to drive margins from low double digits to mid-teens by 2025 [12] - The planned production and launch of a 150-kilowatt DC fast charger is on schedule, with a compatible version expected in early 2024 [26] - The company is maintaining its full-year assumptions but adjusting the mix of organic growth drivers to reflect volume strength [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through dynamic operating conditions and maintain a neutral price-cost position [11] - The outlook for automotive is expected to improve in the second half of the year, driven by the completion of automation projects [28] - Management acknowledged potential risks in the international business but remains optimistic about demand trends in the Americas [90] Other Important Information - The company recognized approximately $7 million of other income in the quarter, which includes non-recurring items [54] - SG&A expenses increased approximately 16% due to higher compensation and unfavorable foreign exchange impacts [53] - The company is committed to maintaining a disciplined approach to pricing in an inflationary environment [84] Q&A Session Summary Question: Insights on automotive and general industries performance - Management noted that the decline in automotive was driven by capital projects and large equipment purchases, but consumables volume was up, indicating strong demand [40] Question: Impact of capital spending timing on Q3 and Q4 - Management confirmed that there was no softness in demand or operational issues affecting the timing of capital projects [44] Question: Outlook for pricing and volume growth - Management indicated that pricing actions have moderated due to overall inflation trends, but volumes are expected to increase, particularly in automotive and automation [84][106] Question: Long-term growth opportunities - Management highlighted the potential for automation and EV charging initiatives to drive future growth, with a focus on expanding customer relationships [99][102]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides a comprehensive overview of the company's financial performance, position, and cash flows for the period ended June 30, 2023, along with management's analysis and disclosures on market risks and internal controls [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the period ended June 30, 2023, show a notable increase in Net Sales and Net Income compared to the same period in 2022, with total assets growing primarily due to increases in current assets and goodwill, and significantly higher cash flow from operating activities [Consolidated Statements of Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For the three and six months ended June 30, 2023, the company reported increased Net Sales and Net Income compared to the prior-year periods, with diluted EPS rising to **$2.36** for the second quarter and **$4.44** for the six months Consolidated Statements of Income (in millions) | Financial Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,060.6 | $969.6 | $2,099.9 | $1,895.0 | | **Gross Profit** | $373.4 | $333.5 | $728.8 | $663.3 | | **Operating Income** | $178.0 | $167.5 | $342.4 | $328.7 | | **Net Income** | $137.3 | $127.8 | $259.3 | $253.9 | | **Diluted EPS** | $2.36 | $2.18 | $4.44 | $4.30 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2023, total assets increased to **$3,311.2 million** from **$3,180.5 million** at December 31, 2022, driven by increases in accounts receivable, goodwill, and other current assets, while total equity rose to **$1,201.4 million** Condensed Consolidated Balance Sheets (in millions) | Balance Sheet Item | June 30, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,646.2 | $1,557.8 | | **Total Assets** | $3,311.2 | $3,180.5 | | **Total Current Liabilities** | $810.8 | $852.9 | | **Total Liabilities** | $2,109.8 | $2,146.5 | | **Total Equity** | $1,201.4 | $1,034.0 | [Consolidated Statements of Cash Flows](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2023, net cash provided by operating activities significantly increased to **$322.8 million** from **$141.3 million** in the prior-year period, with cash used in investing and financing activities primarily for capital expenditures, acquisitions, share repurchases, and dividends Consolidated Statements of Cash Flows (Six Months Ended June 30, in millions) | Cash Flow Activity (Six Months Ended June 30) | 2023 | 2022 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $322.8 | $141.3 | | **Net Cash Used by Investing Activities** | ($76.3) | ($55.0) | | **Net Cash Used by Financing Activities** | ($226.9) | ($122.4) | | **Increase (Decrease) in Cash** | $23.3 | ($40.2) | | **Cash and Cash Equivalents at End of Period** | $220.5 | $152.8 | [Notes to Unaudited Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail significant accounting policies, revenue recognition by product line, and recent acquisitions, including Powermig in May 2023 and the ongoing integration of Fori Automation, which contributed **$97.0 million** in net sales for the first six months of 2023 - On May 3, 2023, the Company acquired 100% of Powermig Automação e Soldagem Ltda., a Brazilian automation engineering firm, for a net purchase price of **$29.6 million**, net of cash acquired[35](index=35&type=chunk) - The acquisition of Fori Automation in December 2022 contributed Net Sales of **$47.8 million** for the three months and **$97.0 million** for the six months ended June 30, 2023[36](index=36&type=chunk) Net Sales by Product Line (Six Months Ended June 30, in millions) | Net Sales by Product Line (Six Months Ended June 30) | 2023 | 2022 | | :--- | :--- | :--- | | **Consumables** | $1,147.6 | $1,108.0 | | **Equipment** | $952.3 | $787.0 | | **Total Net Sales** | $2,099.9 | $1,895.0 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **10.8%** increase in net sales for the first six months of 2023 to higher demand, increased pricing, and contributions from acquisitions, partially offset by unfavorable foreign exchange, while maintaining a strong liquidity position with significantly increased operating cash flow Change in Net Sales (Six Months Ended June 30, 2023 vs 2022) | Change in Net Sales (Six Months Ended June 30, 2023 vs 2022) | Percentage Change | | :--- | :--- | | **Volume** | 3.9% | | **Acquisitions** | 5.4% | | **Price** | 2.6% | | **Foreign Exchange** | (1.0)% | | **Total Net Sales Change** | 10.8% | - Gross profit increased due to higher volumes and pricing actions, with LIFO charges significantly lower in H1 2023 (**$2.5 million**) compared to H1 2022 (**$17.3 million**)[98](index=98&type=chunk) - SG&A expenses increased primarily due to acquisitions and higher employee-related costs[99](index=99&type=chunk) [Segment Results](index=33&type=section&id=Segment%20Results) For the first six months of 2023, Americas Welding net sales grew **18.2%** to **$1,335.6 million**, International Welding sales increased by **2.3%** to **$505.8 million**, and The Harris Products Group saw a **4.5%** decline in sales to **$258.5 million** Segment Net Sales (Six Months Ended June 30, 2023, in millions) | Segment Net Sales (Six Months Ended June 30, 2023) | Net Sales | % Change vs 2022 | | :--- | :--- | :--- | | **Americas Welding** | $1,335.6 | 18.2% | | **International Welding** | $505.8 | 2.3% | | **The Harris Products Group** | $258.5 | (4.5)% | Segment Adjusted EBIT (Six Months Ended June 30, 2023, in millions) | Segment Adjusted EBIT (Six Months Ended June 30, 2023) | Adjusted EBIT | % Change vs 2022 | | :--- | :--- | :--- | | **Americas Welding** | $272.3 | 18.6% | | **International Welding** | $63.4 | (12.1)% | | **The Harris Products Group** | $38.5 | 2.6% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong, with cash from operations increasing to **$322.8 million** in the first half of 2023, driven by improved working capital, while key uses of cash included capital expenditures, acquisitions, share repurchases, and dividends - Cash provided by operating activities increased by **$181.5 million** in H1 2023 compared to H1 2022, primarily due to an improved working capital position[118](index=118&type=chunk)[119](index=119&type=chunk) - The company repurchased **$85.2 million** of its shares and paid **$74.5 million** in dividends during the first six months of 2023[118](index=118&type=chunk) - Adjusted return on invested capital (ROIC) was **22.9%** for the twelve months ended June 30, 2023, compared to **26.3%** for the prior-year period[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes in its exposure to market risk since December 31, 2022, referring readers to its Annual Report on Form 10-K for detailed disclosure - There have been no material changes in the Company's exposure to market risk since December 31, 2022[136](index=136&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with the integration of the recently acquired Fori business systems and control environment expected to be completed in 2023 - The company's management concluded that disclosure controls and procedures were effective as of June 30, 2023[137](index=137&type=chunk) - The company is currently integrating the systems and internal controls of the Fori acquisition, with completion expected in 2023[138](index=138&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, other information, and a list of exhibits filed with the Form 10-Q [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is a co-defendant in numerous cases alleging asbestos-induced illness, with approximately **1,458 plaintiffs** having claims against the company as of June 30, 2023, representing a net decrease of 9 claims - As of June 30, 2023, the Company was a co-defendant in cases alleging asbestos-induced illness involving claims by approximately **1,458 plaintiffs**[142](index=142&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed, and the report directs readers to the detailed discussion in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - The company refers readers to the risk factors discussed in its Annual Report on Form 10-K for the year ended December 31, 2022, for potential risks that could materially affect the business[143](index=143&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the second quarter of 2023, the company repurchased a total of **311,974** common shares at an average price of **$170.13** per share as part of publicly announced share repurchase programs Share Repurchases (2023) | Period (2023) | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | **April** | 50,648 | $160.90 | | **May** | 118,209 | $169.40 | | **June** | 143,117 | $174.00 | | **Q2 Total** | 311,974 | $170.13 | - As of June 30, 2023, **8,441,786** shares remained authorized for repurchase under the company's current program[144](index=144&type=chunk)[146](index=146&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) The report discloses that Steve Hedlund, Executive Vice President & Chief Operating Officer, terminated a Rule 10b5-1 trading plan on May 11, 2023, which covered the sale of **8,235** shares - Executive Vice President & Chief Operating Officer Steve Hedlund terminated a Rule 10b5-1 trading plan on May 11, 2023, which was originally adopted on November 30, 2022, for the sale of **8,235** shares[148](index=148&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various management compensation agreements, officer certifications required by the Sarbanes-Oxley Act, and Inline XBRL data files - Exhibits filed include forms of various stock and performance award agreements for directors and executive officers, as well as certifications from the CEO and CFO[149](index=149&type=chunk)

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarterly period ended March 31, 2023, encompassing income, balance sheet, equity, and cash flow statements with accompanying notes [Consolidated Statements of Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(UNAUDITED)) The company reported net sales of **$1,039.3 million** and net income of **$121.9 million** for Q1 2023, with diluted EPS at **$2.09** Q1 2023 vs Q1 2022 Income Statement Highlights (In thousands, except per share amounts) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net sales | $1,039,343 | $925,448 | | Gross profit | $355,357 | $329,777 | | Operating income | $164,364 | $161,206 | | Net income | $121,931 | $126,030 | | Diluted earnings per share | $2.09 | $2.13 | | Cash dividends declared per share | $0.64 | $0.56 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)) As of March 31, 2023, total assets increased to **$3.25 billion** from **$3.18 billion** at year-end 2022, primarily driven by accounts receivable and goodwill growth Balance Sheet Highlights (In thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $198,803 | $197,150 | | Inventories | $664,599 | $665,451 | | Total Current Assets | $1,610,491 | $1,557,790 | | Goodwill | $679,385 | $665,257 | | **TOTAL ASSETS** | **$3,253,201** | **$3,180,546** | | **Liabilities & Equity** | | | | Total Current Liabilities | $835,939 | $852,897 | | Long-term debt | $1,110,626 | $1,110,396 | | **Total Liabilities** | **$2,127,965** | **$2,146,505** | | **Total Equity** | **$1,125,236** | **$1,034,041** | [Consolidated Statements of Cash Flows](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) Net cash provided by operating activities significantly increased to **$123.9 million** in Q1 2023, driven by improved working capital management Q1 2023 vs Q1 2022 Cash Flow Highlights (In thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $123,931 | $43,090 | | Net cash used by investing activities | ($16,049) | ($40,116) | | Net cash used by financing activities | ($111,316) | ($40,597) | | Increase (decrease) in cash | $1,653 | ($38,585) | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail accounting policies, revenue recognition by product line, the **Fori Automation acquisition**, and segment performance for Americas Welding, International Welding, and The Harris Products Group Net Sales by Product Line (In thousands) | Product Line | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Consumables | $569,684 | $539,162 | | Equipment | $469,659 | $386,286 | | **Total Net sales** | **$1,039,343** | **$925,448** | - On December 1, 2022, the Company acquired Fori Automation, LLC for a total purchase price consideration of **$468.7 million**. Fori contributed **$49.2 million** in net sales in Q1 2023[33](index=33&type=chunk) - The company has rationalization plans within the International Welding segment to align its cost structure, with liabilities of **$1.6 million** recognized as of March 31, 2023[43](index=43&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial results, highlighting a **12.3% increase in net sales** driven by acquisitions, volume, and pricing, alongside segment performance, liquidity, and non-GAAP reconciliations Components of Net Sales Change - Q1 2023 vs Q1 2022 | Component | % Change | | :--- | :--- | | Volume | 4.2% | | Acquisitions | 5.7% | | Price | 4.3% | | Foreign Exchange | (1.9)% | | **Total Net Sales Change** | **12.3%** | Segment Performance - Q1 2023 vs Q1 2022 (In thousands) | Segment | Net Sales (Q1 2023) | Net Sales Change | Adjusted EBIT (Q1 2023) | Adjusted EBIT Change | | :--- | :--- | :--- | :--- | :--- | | Americas Welding | $658,645 | +23.3% | $132,453 | +18.7% | | International Welding | $252,416 | -2.2% | $29,598 | -20.2% | | The Harris Products Group | $128,282 | -3.8% | $18,983 | -3.1% | Non-GAAP Reconciliation Highlights - Q1 2023 | Metric | As Reported | Adjusted | | :--- | :--- | :--- | | Operating Income | $164,364 | $169,097 | | Net Income | $121,931 | $124,200 | | Diluted EPS | $2.09 | $2.13 | - Cash provided by operating activities increased to **$123.9 million** in Q1 2023 from **$43.1 million** in Q1 2022, primarily due to an improved working capital position[105](index=105&type=chunk)[107](index=107&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the Company's exposure to market risk have occurred since December 31, 2022 - There have been no material changes in the Company's exposure to market risk since December 31, 2022[125](index=125&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2023, with integration of the acquired Fori business's internal control systems ongoing - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023[126](index=126&type=chunk) - The company is currently integrating the systems and internal controls of the acquired Fori business, with completion expected in 2023[127](index=127&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including cases with approximately **1,467 plaintiffs** alleging asbestos-induced illnesses as of March 31, 2023 - As of March 31, 2023, the Company was a co-defendant in cases alleging asbestos-induced illness involving claims by approximately **1,467 plaintiffs**[131](index=131&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the comprehensive discussion of risk factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 - Readers are directed to "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, for a comprehensive discussion of potential risks[132](index=132&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **193,823 common shares** at an average price of **$165.91 per share** during the first quarter of 2023 Issuer Purchases of Equity Securities - Q1 2023 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2023 | 51,971 | $154.15 | | February 2023 | 66,257 | $172.23 | | March 2023 | 75,595 | $168.47 | | **Total** | **193,823** | **$165.91** | - On February 12, 2020, the Board authorized a new share repurchase program for up to **10 million shares**. Through March 31, 2023, **1.2 million shares** have been purchased under this program[135](index=135&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[134](index=134&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) A typographical error in the 'Purchase commitments' section of the 2022 Form 10-K was corrected in this filing - A typographical error related to Purchase commitments in the 2022 Form 10-K was corrected in this filing[137](index=137&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including an amendment to the credit agreement and required CEO and CFO certifications - Exhibits filed include an amendment to the credit agreement (10.1), forms of stock option and restricted stock unit agreements for executive officers (10.2, 10.3, 10.4), and CEO/CFO certifications (31.1, 31.2, 32.1)[138](index=138&type=chunk)