Lincoln Electric(LECO)2025-02-26 20:26Financial Performance - Net sales for 2024 were $4,008,670, a decrease of $182,966 or 4.4% compared to 2023's $4,191,636, primarily due to softer demand across all segments[116]. - Gross profit increased to $1,472,912, representing 36.7% of sales, up from 35.0% in 2023, driven by effective cost management and operational efficiencies[116][118]. - Operating income for 2024 was $636,462, or 15.9% of sales, down from 17.1% in 2023, with adjusted operating income at 17.6%[116][121]. - Net income decreased to $466,108, a decline of $79,140 or 14.5% from 2023's $545,248, with diluted earnings per share falling to $8.15 from $9.37[116]. - SG&A expenses rose to $780,590, accounting for 19.5% of sales, primarily due to acquisition-related costs[116][119]. - Rationalization and asset impairment net charges were $55,860 in 2024, significantly higher than the net gains of $36,187 in 2023[116][120]. - Adjusted EBIT for 2024 was $713,605, down $17,769 or 2.4% from $731,374 in 2023[127]. - Cash provided by operating activities decreased by $68,565 to $598,977 in 2024 compared to 2023[138]. - Cash used by investing activities increased significantly by $286,502 to $361,231 in 2024, primarily due to acquisitions[138]. - Return on invested capital (ROIC) as reported was 19.2% in 2024, down from 24.0% in 2023[154]. - Adjusted return on invested capital was 21.8% in 2024, compared to 24.1% in 2023[154]. Segment Performance - The Americas Welding segment reported net sales of $2,564,847, a decrease of 3.4% from 2023, while International Welding saw a 10.2% decline to $933,722[124]. - The Harris Products Group experienced a 2.8% increase in net sales to $510,101, attributed to price actions in response to higher commodity costs[124][125]. - Americas Welding segment net sales decreased by $90,699 or 3.4% to $2,564,847 in 2024[127]. - International Welding segment net sales decreased by $106,284 or 10.2% to $933,722 in 2024[127]. - The Harris Products Group saw an increase in net sales of $14,017 or 2.8% to $510,101 in 2024[127]. Tax and Liabilities - The effective tax rate increased to 21.6% in 2024 from 20.6% in 2023, influenced by the mix of earnings and discrete tax items[116][123]. - The Company had total liabilities of $55,425 for deferred compensation as of December 31, 2024[148]. - The Company had approximately $207,739 of gross deferred tax assets as of December 31, 2024[167]. - A valuation allowance of $35,284 was recorded against certain deferred tax assets based on realizability assessments[167]. Cash and Debt Management - As of December 31, 2024, the company had $377,262 in cash and cash equivalents and $10,520 in outstanding borrowings under its revolving credit facilities[134]. - Total debt outstanding as of December 31, 2024, was $1,261,075, including $110,524 in short-term debt[145]. - Total future minimum lease payments amounted to $61,942, with $14,896 classified as short-term lease obligations[146]. - The Company had total purchase commitments of $91,028 as of December 31, 2024, including $89,792 in current liabilities[147]. Risk Management - The Company manages financial market risks, including currency exchange rates, commodity prices, and interest rates, using derivative financial instruments[182]. - The gross notional dollar amount of foreign exchange contracts at December 31, 2024, was $96,444[186]. - A hypothetical 10% change in year-end exchange rates would have resulted in an increase or decrease to income before income taxes of $17,271 related to foreign exchange positions[187]. - A hypothetical 10% strengthening or weakening in the U.S. dollar would have changed accumulated other comprehensive income (loss) by $32,617[187]. - The notional dollar amount of a foreign currency forward contract hedge designated as a net investment hedge was $319,450 at December 31, 2024[187]. - The Company does not expect any counterparties to fail to meet their obligations, minimizing credit risk through investments with major banks[188]. Operational Investments - The company continues to invest in research and development to maintain its market-leading position and improve product quality and productivity[105]. - The company anticipates capital expenditures of $100,000 to $120,000 in 2025 for capacity and operational improvements[141]. - Average operating working capital to net sales decreased to 16.9% in 2024 from 17.1% in 2023[143]. - The excess of current cost over LIFO cost was $120,633 in 2024, down from $129,946 in 2023[170].