UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 2014
LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
0-1402
(Commission File Number)
|
| | |
Ohio | | 34-1860551 |
(State or other jurisdiction of incorporation) | | (I.R.S. Employer Identification No.) |
22801 St. Clair Avenue, Cleveland, Ohio 44117
(Address of principal executive offices, with zip code)
(216) 481-8100
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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| | |
Item 2.02 | | Results of Operations and Financial Condition. |
| | On February 17, 2015, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended December 31, 2014. A copy of the Company’s press release issued on February 17, 2015 is attached hereto as Exhibit 99.1 and incorporated herein by reference. The press release is also available through the Company’s website at www.lincolnelectric.com. The information in this Current Report on Form 8-K, including the Exhibit, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act. |
| | |
Item 9.01 | | Financial Statements and Exhibits. |
| | |
| | (d) Exhibits |
| | |
| | 99.1 The Company’s press release dated February 17, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | |
| | LINCOLN ELECTRIC HOLDINGS, INC. |
| | |
| | /s/ Vincent K. Petrella |
| | Vincent K. Petrella |
| | Executive Vice President, Chief Financial Officer and Treasurer |
| | (principal financial and accounting officer) |
| | February 17, 2015 |
LINCOLN ELECTRIC HOLDINGS, INC.
INDEX TO EXHIBITS
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| | | |
| | |
Exhibit No. | | Exhibit |
| | |
99.1 |
| | The Company’s press release dated February 17, 2015. |
| | |
Exhibit 99.1
Investor Relations: Amanda Butler (216) 383-2534
Amanda_Butler@lincolnelectric.com
LINCOLN ELECTRIC REPORTS FOURTH QUARTER AND FULL YEAR 2014 RESULTS
Q4 Reported and Adjusted EPS $0.96
Full Year 2014 EPS of $3.18, Adjusted EPS of $3.82
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|
Fourth Quarter and Full Year 2014 Key Metric Highlights |
§ Q4 reported operating income margin at 15.3% of sales; 15.4% on an adjusted basis |
§ FY2014 operating income margin at 13.3% of sales; a record 15.1% on an adjusted basis |
§ Record FY2014 cash flows from operations - up 18.5% to $402 million |
§ Solid execution with 19.1% ROIC and a record 16.5% average operating working capital ratio |
§ Returned a record $380 million to shareholders in FY2014 through share repurchases and dividend payments |
|
CLEVELAND, Ohio, Tuesday, February 17, 2015 -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2014 net income of $75.2 million, or $0.96 per diluted share. This compares with net income of $88.3 million, or $1.07 per diluted share, in the comparable 2013 period. Adjusted net income in the fourth quarter 2014 was $75.4 million, or $0.96 per diluted share, compared with adjusted net income of $89.2 million, or $1.09 per diluted share, in the comparable 2013 period. The 2013 period includes a benefit of $0.22 per diluted share from our Venezuelan operations, which operates in a hyper-inflationary environment. This compares with no contribution to Adjusted net income from our Venezuelan operations in the fourth quarter 2014.
Sales decreased 4.3% to $684.0 million in the fourth quarter 2014 versus $714.8 million in the comparable 2013 period primarily due to unfavorable foreign currency translation and volume weakness in our South America Welding segment. Operating income for the fourth quarter decreased 11.8% to $104.9 million, or 15.3% of sales, from $118.9 million, or 16.6% of sales, in the comparable 2013 period. Adjusted operating income decreased 12.3% to $105.1 million or 15.4% of sales, compared with $119.9 million, or 16.8% of sales in 2013. Lower 2014 operating income results primarily reflect a challenging year-over-year comparison in our South America Welding segment due to contraction in our Venezuelan operations.
Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We ended the year with a strong finish highlighted by compelling results in North America and record performance across key metrics. Steady execution of our '2020 initiatives' helped offset a challenging year-over-year comparison from our Venezuelan business and rising foreign exchange headwinds. I am pleased to report that excluding Venezuela, the business achieved a 130 basis point expansion in operating income margin on an adjusted basis and ten percent growth in EPS in 2014. Looking ahead to 2015, we expect to benefit from our diversified end market and geographic exposure, as well as the strength of our portfolio. While we are cautious about near-term factors such as foreign exchange and oil prices, we expect our strategic initiatives will continue to generate value for all of our stakeholders through the cycle.”
Dividend and Share Repurchases
The Company’s Board of Directors increased the quarterly cash dividend 26%, from $0.23 per share to $0.29, which was paid on January 15, 2015 to shareholders of record as of December 31, 2014. During the quarter, the Company returned $57.8 million to shareholders through the repurchase of the Company’s common shares. The Company's 2015 share repurchase target is $400 million.
Lincoln Electric Reports Fourth Quarter and Full Year 2014 Financial Results
Twelve Months 2014 Summary
Net income for the twelve months ended December 31, 2014 was $254.7 million, or $3.18 per diluted share, which includes rationalization and asset impairment charges of $30.9 million and charges of $21.1 million from Venezuelan foreign exchange remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. This compares with net income of $293.8 million, or $3.54 per diluted share, in 2013. Adjusted net income was $305.9 million, or $3.82 per diluted share, compared with adjusted net income of $313.2 million, or $3.77 per diluted share, in 2013. Adjusted net income for the twelve months ended December 31, 2014 includes earnings of $0.17 per diluted share from the Company's Venezuelan operations as compared with $0.46 per diluted share in the comparable 2013 period.
Sales remained relatively steady at $2.8 billion in the twelve months ended December 31, 2014 as compared with $2.9 billion in the comparable 2013 period. This result reflects lower volumes and unfavorable foreign exchange translation being offset by pricing actions and acquisitions. Operating income for the twelve months ended December 31, 2014 decreased to $373.7 million, or 13.3% of sales, compared with $407.0 million, or 14.3% of sales, in the comparable 2013 period. Adjusted operating income was $424.9 million or 15.1% of sales, compared with $428.4 million, or 15.0% of sales in 2013. Operating income and Adjusted operating income include a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.
Webcast Information
A conference call to discuss fourth quarter and full year 2014 financial results will be webcast live today, February 17, 2015, at 10:00 a.m., Eastern Time. This webcast is accessible at http://ir.lincolnelectric.com. Listeners should go to the web site prior to the call to register and download and install any necessary audio software. A replay of the webcast will be available on the Company's web site.
Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 61512318. Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.
Financial results for the fourth quarter and full year 2014 can also be obtained at http://ir.lincolnelectric.com.
About Lincoln Electric
Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 47 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at http://www.lincolnelectric.com.
Non-GAAP Information
Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company’s financial performance from period to period. Management uses this information in assessing and evaluating the Company’s underlying operating performance. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures.
Lincoln Electric Reports Fourth Quarter and Full Year 2014 Financial Results
Forward-Looking Statements
The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. 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. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic and market conditions; the effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations, including in highly inflationary countries such as Venezuela; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K.
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Income
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| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three months ended December 31, | | Fav (Unfav) to Prior Year |
| | 2014 | | % of Sales | | 2013 | | % of Sales | | $ | | % |
Net sales | | $ | 683,954 |
| | 100.0 | % | | $ | 714,791 |
| | 100.0 | % | | $ | (30,837 | ) | | (4.3 | %) |
Cost of goods sold | | 452,869 |
| | 66.2 | % | | 471,744 |
| | 66.0 | % | | 18,875 |
| | 4.0 | % |
Gross profit | | 231,085 |
| | 33.8 | % | | 243,047 |
| | 34.0 | % | | (11,962 | ) | | (4.9 | %) |
Selling, general & administrative expenses | | 126,002 |
| | 18.4 | % | | 123,883 |
| | 17.3 | % | | (2,119 | ) | | (1.7 | %) |
Rationalization and asset impairment charges | | 166 |
| | — |
| | 259 |
| | — |
| | 93 |
| | 35.9 | % |
Operating income | | 104,917 |
| | 15.3 | % | | 118,905 |
| | 16.6 | % | | (13,988 | ) | | (11.8 | %) |
Interest income | | 628 |
| | 0.1 | % | | 868 |
| | 0.1 | % | | (240 | ) | | (27.6 | %) |
Equity earnings in affiliates | | 1,104 |
| | 0.2 | % | | 1,119 |
| | 0.2 | % | | (15 | ) | | (1.3 | %) |
Other income | | 791 |
| | 0.1 | % | | 1,053 |
| | 0.1 | % | | (262 | ) | | (24.9 | %) |
Interest expense | | (6,704 | ) | | (1.0 | %) | | (557 | ) | | (0.1 | %) | | (6,147 | ) | | — |
|
Income before income taxes | | 100,736 |
| | 14.7 | % | | 121,388 |
| | 17.0 | % | | (20,652 | ) | | (17.0 | %) |
Income taxes | | 25,401 |
| | 3.7 | % | | 33,323 |
| | 4.7 | % | | 7,922 |
| | 23.8 | % |
Effective tax rate | | 25.2 | % | | |
| | 27.5 | % | | |
| | 2.3 | % | | |
Net income including non-controlling interests | | 75,335 |
| | 11.0 | % | | 88,065 |
| | 12.3 | % | | (12,730 | ) | | (14.5 | %) |
Non-controlling interests in subsidiaries’ earnings (loss) | | 123 |
| | — |
| | (259 | ) | | — |
| | 382 |
| | 147.5 | % |
Net income | | $ | 75,212 |
| | 11.0 | % | | $ | 88,324 |
| | 12.4 | % | | $ | (13,112 | ) | | (14.8 | %) |
| | | | | | | | | | | | |
Basic earnings per share | | $ | 0.97 |
| | |
| | $ | 1.09 |
| | |
| | $ | (0.12 | ) | | (11.0 | %) |
Diluted earnings per share | | $ | 0.96 |
| | |
| | $ | 1.07 |
| | |
| | $ | (0.11 | ) | | (10.3 | %) |
Weighted average shares (basic) | | 77,403 |
| | |
| | 81,132 |
| | |
| | |
| | |
|
Weighted average shares (diluted) | | 78,280 |
| | |
| | 82,184 |
| | |
| | |
| | |
|
| | Twelve months ended December 31, | | Fav (Unfav) to Prior Year |
| | 2014 | | % of Sales | | 2013 | | % of Sales | | $ | | % |
Net sales | | $ | 2,813,324 |
| | 100.0 | % | | $ | 2,852,671 |
| | 100.0 | % | | $ | (39,347 | ) | | (1.4 | %) |
Cost of goods sold | | 1,864,027 |
| | 66.3 | % | | 1,910,017 |
| | 67.0 | % | | 45,990 |
| | 2.4 | % |
Gross profit | | 949,297 |
| | 33.7 | % | | 942,654 |
| | 33.0 | % | | 6,643 |
| | 0.7 | % |
Selling, general & administrative expenses | | 545,497 |
| | 19.4 | % | | 527,206 |
| | 18.5 | % | | (18,291 | ) | | (3.5 | %) |
Rationalization and asset impairment charges | | 30,053 |
| | 1.1 | % | | 8,463 |
| | 0.3 | % | | (21,590 | ) | | (255.1 | %) |
Operating income | | 373,747 |
| | 13.3 | % | | 406,985 |
| | 14.3 | % | | (33,238 | ) | | (8.2 | %) |
Interest income | | 3,093 |
| | 0.1 | % | | 3,320 |
| | 0.1 | % | | (227 | ) | | (6.8 | %) |
Equity earnings in affiliates | | 5,412 |
| | 0.2 | % | | 4,806 |
| | 0.2 | % | | 606 |
| | 12.6 | % |
Other income | | 3,995 |
| | 0.1 | % | | 4,194 |
| | 0.1 | % | | (199 | ) | | (4.7 | %) |
Interest expense | | (10,434 | ) | | (0.4 | %) | | (2,864 | ) | | (0.1 | %) | | (7,570 | ) | | (264.3 | %) |
Income before income taxes | | 375,813 |
| | 13.4 | % | | 416,441 |
| | 14.6 | % | | (40,628 | ) | | (9.8 | %) |
Income taxes | | 121,933 |
| | 4.3 | % | | 124,754 |
| | 4.4 | % | | 2,821 |
| | 2.3 | % |
Effective tax rate | | 32.4 | % | | |
| | 30.0 | % | | |
| | (2.4 | %) | | |
Net income including non-controlling interests | | 253,880 |
| | 9.0 | % | | 291,687 |
| | 10.2 | % | | (37,807 | ) | | (13.0 | %) |
Non-controlling interests in subsidiaries’ earnings (loss) | | (806 | ) | | — |
| | (2,093 | ) | | (0.1 | %) | | 1,287 |
| | 61.5 | % |
Net income | | $ | 254,686 |
| | 9.1 | % | | $ | 293,780 |
| | 10.3 | % | | $ | (39,094 | ) | | (13.3 | %) |
| | | | | | | | | | | | |
Basic earnings per share | | $ | 3.22 |
| | |
| | $ | 3.58 |
| | |
| | $ | (0.36 | ) | | (10.1 | %) |
Diluted earnings per share | | $ | 3.18 |
| | |
| | $ | 3.54 |
| | |
| | $ | (0.36 | ) | | (10.2 | %) |
Weighted average shares (basic) | | 79,185 |
| | |
| | 81,978 |
| | |
| | |
| | |
|
Weighted average shares (diluted) | | 80,096 |
| | |
| | 83,042 |
| | |
| | |
| | |
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Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Non-GAAP Financial Measures
|
| | | | | | | | | | | | | | | | |
| | Three months ended December 31, | | Twelve months ended December 31, |
| | 2014 | | 2013 | | 2014 | | 2013 |
Operating income as reported | | $ | 104,917 |
| | $ | 118,905 |
| | $ | 373,747 |
| | $ | 406,985 |
|
Special items (pre-tax): | | | | | | |
| | |
|
Rationalization and asset impairment charges (1) | | 166 |
| | 259 |
| | 30,053 |
| | 8,463 |
|
Loss on the sale of land (2) | | — |
| | 705 |
| | — |
| | 705 |
|
Venezuela foreign exchange losses (3) | | — |
| | — |
| | 21,133 |
| | 12,198 |
|
Adjusted operating income (5) | | $ | 105,083 |
| | $ | 119,869 |
| | $ | 424,933 |
| | $ | 428,351 |
|
| | | | | | | | |
Net income as reported | | $ | 75,212 |
| | $ | 88,324 |
| | $ | 254,686 |
| | $ | 293,780 |
|
Special items (after-tax): | | |
| | |
| | |
| | |
|
Rationalization and asset impairment charges (1) | | 167 |
| | 223 |
| | 30,914 |
| | 7,573 |
|
Loss on the sale of land (2) | | — |
| | 705 |
| | — |
| | 705 |
|
Venezuela foreign exchange losses (3) | | — |
| | — |
| | 21,133 |
| | 12,198 |
|
Special items attributable to non-controlling interests (4) | | — |
| | (47 | ) | | (805 | ) | | (1,068 | ) |
Adjusted net income (5) | | $ | 75,379 |
| | $ | 89,205 |
| | $ | 305,928 |
| | $ | 313,188 |
|
| | | | | | | | |
Diluted earnings per share as reported | | $ | 0.96 |
| | $ | 1.07 |
| | $ | 3.18 |
| | $ | 3.54 |
|
Special items | | — |
| | 0.02 |
| | 0.64 |
| | 0.23 |
|
Adjusted diluted earnings per share (5) | | $ | 0.96 |
| | $ | 1.09 |
| | $ | 3.82 |
| | $ | 3.77 |
|
| | | | | | | | |
Weighted average shares (diluted) | | 78,280 |
| | 82,184 |
| | 80,096 |
| | 83,042 |
|
| |
(1) | The three and twelve months ended December 31, 2014 include non-cash asset impairment charges. The twelve months ended December 31, 2014 also includes net rationalization credits including gains on the sale of assets. The three and twelve months ended December 31, 2013 include net charges associated with long-lived asset impairments and severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets, including real estate, at rationalized operations. |
| |
(2) | Represents the loss realized related to the sale of land. |
| |
(3) | The twelve months ended December 31, 2014 represents the impact of the Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism in the first quarter. The twelve months ended December 31, 2013 represents the impact of the devaluation of the Venezuelan currency. |
| |
(4) | Represents the portion of special items attributable to non-controlling interests. |
| |
(5) | Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes are important to investors to evaluate and compare the Company’s financial performance from period to period. Management uses this information in assessing and evaluating the Company’s underlying operating performance. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. |
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Balance Sheet Highlights
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| | | | | | | | |
Selected Consolidated Balance Sheet Data | | December 31, 2014 | | December 31, 2013 |
Cash and cash equivalents | | $ | 278,379 |
| | $ | 299,825 |
|
Total current assets | | 1,098,677 |
| | 1,130,775 |
|
Property, plant and equipment, net | | 437,209 |
| | 484,005 |
|
Total assets | | 1,939,215 |
| | 2,151,867 |
|
Total current liabilities | | 492,419 |
| | 456,917 |
|
Short-term debt (1) | | 68,166 |
| | 15,296 |
|
Long-term debt | | 2,488 |
| | 3,791 |
|
Total equity | | 1,285,781 |
| | 1,530,688 |
|
| | | | |
Net Operating Working Capital | | December 31, 2014 | | December 31, 2013 |
Accounts receivable | | $ | 321,862 |
| | $ | 367,134 |
|
Inventory | | 330,840 |
| | 349,963 |
|
Trade accounts payable | | 202,482 |
| | 212,799 |
|
Net operating working capital | | $ | 450,220 |
| | $ | 504,298 |
|
| | | | |
Net operating working capital to net sales (2) | | 16.5 | % | | 17.6 | % |
| | | | |
Invested Capital | | December 31, 2014 | | December 31, 2013 |
Short-term debt (1) | | $ | 68,166 |
| | $ | 15,296 |
|
Long-term debt | | 2,488 |
| | 3,791 |
|
Total debt | | 70,654 |
| | 19,087 |
|
Total equity | | 1,285,781 |
| | 1,530,688 |
|
Invested capital | | $ | 1,356,435 |
| | $ | 1,549,775 |
|
| | | | |
Total debt / invested capital | | 5.2 | % | | 1.2 | % |
Return on invested capital (3) | | 19.1 | % | | 18.9 | % |
| |
(1) | Includes current portion of long-term debt. |
| |
(2) | Net operating working capital to net sales is defined as net operating working capital divided by annualized rolling three months of sales. |
| |
(3) | Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest divided by invested capital. |
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
|
| | | | | | | | |
| | Three months ended December 31, |
| | 2014 | | 2013 |
OPERATING ACTIVITIES: | | |
| | |
|
Net income | | $ | 75,212 |
| | $ | 88,324 |
|
Non-controlling interests in subsidiaries’ earnings (loss) | | 123 |
| | (259 | ) |
Net income including non-controlling interests | | 75,335 |
| | 88,065 |
|
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | | |
| | |
|
Rationalization and asset impairment charges | | 127 |
| | 43 |
|
Depreciation and amortization | | 16,590 |
| | 17,002 |
|
Equity loss (earnings) in affiliates, net | | 53 |
| | (347 | ) |
Pension expense | | 2,761 |
| | 7,513 |
|
Pension contributions and payments | | (1,429 | ) | | (2,939 | ) |
Other non-cash items, net | | 14,357 |
| | (296 | ) |
Changes in operating assets and liabilities, net of effects from acquisitions: | | |
| | |
|
Decrease in accounts receivable | | 28,264 |
| | 12,545 |
|
Decrease in inventories | | 5,435 |
| | 23,199 |
|
Increase in trade accounts payable | | 13,669 |
| | 33,497 |
|
Net change in other current assets and liabilities | | (24,954 | ) | | (80,601 | ) |
Net change in other long-term assets and liabilities | | 3,441 |
| | (878 | ) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | | 133,649 |
| | 96,803 |
|
| | | | |
INVESTING ACTIVITIES: | | |
| | |
|
Capital expenditures | | (17,560 | ) | | (16,324 | ) |
Acquisition of businesses, net of cash acquired | | (23,338 | ) | | (48,225 | ) |
Proceeds from sale of property, plant and equipment | | 411 |
| | 597 |
|
Other investing activities | | — |
| | 2,500 |
|
NET CASH USED BY INVESTING ACTIVITIES | | (40,487 | ) | | (61,452 | ) |
| | | | |
FINANCING ACTIVITIES: | | |
| | |
|
Net change in borrowings | | (17,783 | ) | | 511 |
|
Proceeds from exercise of stock options | | 3,171 |
| | 4,220 |
|
Excess tax benefits from stock-based compensation | | 2,606 |
| | 3,629 |
|
Purchase of shares for treasury | | (57,775 | ) | | (54,238 | ) |
Cash dividends paid to shareholders | | (17,866 | ) | | (16,290 | ) |
Transactions with non-controlling interests | | — |
| | (3,278 | ) |
NET CASH USED BY FINANCING ACTIVITIES | | (87,647 | ) | | (65,446 | ) |
| | | | |
Effect of exchange rate changes on Cash and cash equivalents | | (6,659 | ) | | (389 | ) |
DECREASE IN CASH AND CASH EQUIVALENTS | | (1,144 | ) | | (30,484 | ) |
Cash and cash equivalents at beginning of period | | 279,523 |
| | 330,309 |
|
Cash and cash equivalents at end of period | | $ | 278,379 |
| | $ | 299,825 |
|
| | | | |
Cash dividends paid per share | | $ | 0.23 |
| | $ | 0.20 |
|
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
|
| | | | | | | | |
| | Twelve months ended December 31, |
| | 2014 | | 2013 |
OPERATING ACTIVITIES: | | |
| | |
|
Net income | | $ | 254,686 |
| | $ | 293,780 |
|
Non-controlling interests in subsidiaries’ loss | | (806 | ) | | (2,093 | ) |
Net income including non-controlling interests | | 253,880 |
| | 291,687 |
|
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | | |
| | |
|
Rationalization and asset impairment charges | | 29,574 |
| | 5,092 |
|
Depreciation and amortization | | 69,607 |
| | 68,883 |
|
Equity earnings in affiliates, net | | (1,848 | ) | | (1,660 | ) |
Pension expense | | 12,395 |
| | 29,774 |
|
Pension contributions and payments | | (36,072 | ) | | (87,356 | ) |
Other non-cash items, net | | 44,398 |
| | 29,461 |
|
Changes in operating assets and liabilities, net of effects from acquisitions: | | |
| | |
|
Decrease (increase) in accounts receivable | | 5,876 |
| | (5,437 | ) |
(Increase) decrease in inventories | | (5,718 | ) | | 13,310 |
|
Increase in trade accounts payable | | 2,135 |
| | 794 |
|
Net change in other current assets and liabilities | | 28,345 |
| | (4,974 | ) |
Net change in other long-term assets and liabilities | | (870 | ) | | (680 | ) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | | 401,702 |
| | 338,894 |
|
| | | | |
INVESTING ACTIVITIES: | | |
| | |
|
Capital expenditures | | (72,990 | ) | | (76,015 | ) |
Acquisition of businesses, net of cash acquired | | (24,230 | ) | | (53,161 | ) |
Proceeds from sale of property, plant and equipment | | 17,457 |
| | 1,393 |
|
Other investing activities | | 778 |
| | (1,717 | ) |
NET CASH USED BY INVESTING ACTIVITIES | | (78,985 | ) | | (129,500 | ) |
| | | | |
FINANCING ACTIVITIES: | | |
| | |
|
Net change in borrowings | | 53,331 |
| | (1,840 | ) |
Proceeds from exercise of stock options | | 9,116 |
| | 20,297 |
|
Excess tax benefits from stock-based compensation | | 5,967 |
| | 10,602 |
|
Purchase of shares for treasury | | (307,178 | ) | | (167,879 | ) |
Cash dividends paid to shareholders | | (73,261 | ) | | (49,277 | ) |
Transactions with non-controlling interests | | (2,330 | ) | | (6,087 | ) |
NET CASH USED BY FINANCING ACTIVITIES | | (314,355 | ) | | (194,184 | ) |
| | | | |
Effect of exchange rate changes on Cash and cash equivalents | | (29,808 | ) | | (1,849 | ) |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | (21,446 | ) | | 13,361 |
|
Cash and cash equivalents at beginning of period | | 299,825 |
| | 286,464 |
|
Cash and cash equivalents at end of period | | $ | 278,379 |
| | $ | 299,825 |
|
| | | | |
Cash dividends paid per share | | $ | 0.92 |
| | $ | 0.60 |
|
Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | North America Welding | | Europe Welding | | Asia Pacific Welding | | South America Welding | | The Harris Products Group | | Corporate / Eliminations | | Consolidated |
Three months ended December 31, 2014 | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 429,907 |
| | $ | 97,288 |
| | $ | 58,113 |
| | $ | 32,689 |
| | $ | 65,957 |
| | $ | — |
| | $ | 683,954 |
|
Inter-segment sales | | 28,064 |
| | 3,699 |
| | 3,176 |
| | 71 |
| | 1,821 |
| | (36,831 | ) | | — |
|
Total | | $ | 457,971 |
| | $ | 100,987 |
| | $ | 61,289 |
| | $ | 32,760 |
| | $ | 67,778 |
| | $ | (36,831 | ) | | $ | 683,954 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 88,456 |
| | $ | 9,429 |
| | $ | 1,715 |
| | $ | (217 | ) | | $ | 6,380 |
| | $ | 1,049 |
| | $ | 106,812 |
|
As a percent of total sales | | 19.3 | % | | 9.3 | % | | 2.8 | % | | (0.7 | %) | | 9.4 | % | | |
| | 15.6 | % |
Special items (gain) charge (2) | | $ | — |
| | $ | (19 | ) | | $ | 185 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 166 |
|
EBIT, as adjusted (4) | | $ | 88,456 |
| | $ | 9,410 |
| | $ | 1,900 |
| | $ | (217 | ) | | $ | 6,380 |
| | $ | 1,049 |
| | $ | 106,978 |
|
As a percent of total sales | | 19.3 | % | | 9.3 | % | | 3.1 | % | | (0.7 | %) | | 9.4 | % | | |
| | 15.6 | % |
Three months ended December 31, 2013 | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 410,033 |
| | $ | 111,874 |
| | $ | 63,170 |
| | $ | 63,303 |
| | $ | 66,411 |
| | $ | — |
| | $ | 714,791 |
|
Inter-segment sales | | 27,385 |
| | 6,046 |
| | 2,327 |
| | 11 |
| | 2,396 |
| | (38,165 | ) | | — |
|
Total | | $ | 437,418 |
| | $ | 117,920 |
| | $ | 65,497 |
| | $ | 63,314 |
| | $ | 68,807 |
| | $ | (38,165 | ) | | $ | 714,791 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 83,902 |
| | $ | 7,752 |
| | $ | (792 | ) | | $ | 25,187 |
| | $ | 6,415 |
| | $ | (1,387 | ) | | $ | 121,077 |
|
As a percent of total sales | | 19.2 | % | | 6.6 | % | | (1.2 | %) | | 39.8 | % | | 9.3 | % | | |
| | 16.9 | % |
Special items (gain) charge (3) | | $ | (57 | ) | | $ | 381 |
| | $ | 640 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 964 |
|
EBIT, as adjusted (4) | | $ | 83,845 |
| | $ | 8,133 |
| | $ | (152 | ) | | $ | 25,187 |
| | $ | 6,415 |
| | $ | (1,387 | ) | | $ | 122,041 |
|
As a percent of total sales | | 19.2 | % | | 6.9 | % | | (0.2 | %) | | 39.8 | % | | 9.3 | % | | |
| | 17.1 | % |
Twelve months ended December 31, 2014 | | | | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 1,700,924 |
| | $ | 425,775 |
| | $ | 243,800 |
| | $ | 148,595 |
| | $ | 294,230 |
| | $ | — |
| | $ | 2,813,324 |
|
Inter-segment sales | | 124,732 |
| | 19,586 |
| | 14,820 |
| | 144 |
| | 8,210 |
| | (167,492 | ) | | — |
|
Total | | $ | 1,825,656 |
| | $ | 445,361 |
| | $ | 258,620 |
| | $ | 148,739 |
| | $ | 302,440 |
| | $ | (167,492 | ) | | $ | 2,813,324 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 335,533 |
| | $ | 47,918 |
| | $ | (27,314 | ) | | $ | (5,762 | ) | | $ | 28,563 |
| | $ | 4,216 |
| | $ | 383,154 |
|
As a percent of total sales | | 18.4 | % | | 10.8 | % | | (10.6 | %) | | (3.9 | %) | | 9.4 | % | | |
| | 13.6 | % |
Special items (gain) charge (2) | | $ | (68 | ) | | $ | 904 |
| | $ | 28,635 |
| | $ | 21,715 |
| | $ | — |
| | $ | — |
| | $ | 51,186 |
|
EBIT, as adjusted (4) | | $ | 335,465 |
| | $ | 48,822 |
| | $ | 1,321 |
| | $ | 15,953 |
| | $ | 28,563 |
| | $ | 4,216 |
| | $ | 434,340 |
|
As a percent of total sales | | 18.4 | % | | 11.0 | % | | 0.5 | % | | 10.7 | % | | 9.4 | % | | |
| | 15.4 | % |
Twelve months ended December 31, 2013 | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 1,652,769 |
| | $ | 429,548 |
| | $ | 266,282 |
| | $ | 195,895 |
| | $ | 308,177 |
| | $ | — |
| | $ | 2,852,671 |
|
Inter-segment sales | | 127,254 |
| | 19,911 |
| | 14,906 |
| | 233 |
| | 9,605 |
| | (171,909 | ) | | — |
|
Total | | $ | 1,780,023 |
| | $ | 449,459 |
| | $ | 281,188 |
| | $ | 196,128 |
| | $ | 317,782 |
| | $ | (171,909 | ) | | $ | 2,852,671 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 317,455 |
| | $ | 34,202 |
| | $ | (4,256 | ) | | $ | 45,108 |
| | $ | 27,826 |
| | $ | (4,350 | ) | | $ | 415,985 |
|
As a percent of total sales | | 17.8 | % | | 7.6 | % | | (1.5 | %) | | 23.0 | % | | 8.8 | % | | |
| | 14.6 | % |
Special items (gain) charge (3) | | $ | 1,052 |
| | $ | 2,045 |
| | $ | 6,071 |
| | $ | 12,198 |
| | $ | — |
| | $ | — |
| | $ | 21,366 |
|
EBIT, as adjusted (4) | | $ | 318,507 |
| | $ | 36,247 |
| | $ | 1,815 |
| | $ | 57,306 |
| | $ | 27,826 |
| | $ | (4,350 | ) | | $ | 437,351 |
|
As a percent of total sales | | 17.9 | % | | 8.1 | % | | 0.6 | % | | 29.2 | % | | 8.8 | % | | |
| | 15.3 | % |
| |
(1) | EBIT is defined as Operating income plus Equity earnings in affiliates and Other income. |
| |
(2) | Special items in the three and twelve months ended December 31, 2014 include non-cash asset impairment charges. The twelve months ended December 31, 2014 also includes net rationalization credits including gains on the sale of assets. Special items in the twelve months ended December 31, 2014 also include the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. |
| |
(3) | Special items in the three and twelve months ended December 31, 2013 include net rationalization and asset impairment charges and the impact of the devaluation of the Venezuelan currency. |
| |
(4) | The primary profit measure used by management to assess segment performance is EBIT, as adjusted. EBIT for each operating segment is adjusted for special items to derive EBIT, as adjusted. |
Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended December 31st Change in Net Sales by Segment |
| | | | | | |
| | | | Change in Net Sales due to: | | |
| | Net Sales 2013 | | Volume | | Acquisitions | | Price | | Foreign Exchange | | Net Sales 2014 |
Operating Segments | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | $ | 410,033 |
| | $ | 5,331 |
| | $ | 15,936 |
| | $ | 2,902 |
| | $ | (4,295 | ) | | $ | 429,907 |
|
Europe Welding | | 111,874 |
| | (2,156 | ) | | — |
| | (912 | ) | | (11,518 | ) | | 97,288 |
|
Asia Pacific Welding | | 63,170 |
| | (4,866 | ) | | — |
| | 374 |
| | (565 | ) | | 58,113 |
|
South America Welding | | 63,303 |
| | (27,900 | ) | | — |
| | 13,896 |
| | (16,610 | ) | | 32,689 |
|
The Harris Products Group | | 66,411 |
| | 4,874 |
| | — |
| | (3,927 | ) | | (1,401 | ) | | 65,957 |
|
Consolidated | | $ | 714,791 |
| | $ | (24,717 | ) | | $ | 15,936 |
| | $ | 12,333 |
| | $ | (34,389 | ) | | $ | 683,954 |
|
% Change | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | |
| | 1.3 | % | | 3.9 | % | | 0.7 | % | | (1.0 | %) | | 4.8 | % |
Europe Welding | | |
| | (1.9 | %) | | — |
| | (0.8 | %) | | (10.3 | %) | | (13.0 | %) |
Asia Pacific Welding | | |
| | (7.7 | %) | | — |
| | 0.6 | % | | (0.9 | %) | | (8.0 | %) |
South America Welding | | |
| | (44.1 | %) | | — |
| | 22.0 | % | | (26.2 | %) | | (48.4 | %) |
The Harris Products Group | | |
| | 7.3 | % | | — |
| | (5.9 | %) | | (2.1 | %) | | (0.7 | %) |
Consolidated | | |
| | (3.5 | %) | | 2.2 | % | | 1.7 | % | | (4.8 | %) | | (4.3 | %) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Twelve Months Ended December 31st Change in Net Sales by Segment |
| | | | | | |
| | | | Change in Net Sales due to: | | |
| | Net Sales 2013 | | Volume | | Acquisitions | | Price | | Foreign Exchange | | Net Sales 2014 |
Operating Segments | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | $ | 1,652,769 |
| | $ | 4,335 |
| | $ | 42,184 |
| | $ | 13,247 |
| | $ | (11,611 | ) | | $ | 1,700,924 |
|
Europe Welding | | 429,548 |
| | 8,107 |
| | — |
| | (3,722 | ) | | (8,158 | ) | | 425,775 |
|
Asia Pacific Welding | | 266,282 |
| | (17,516 | ) | | — |
| | 1,351 |
| | (6,317 | ) | | 243,800 |
|
South America Welding | | 195,895 |
| | (59,554 | ) | | — |
| | 57,461 |
| | (45,207 | ) | | 148,595 |
|
The Harris Products Group | | 308,177 |
| | 6,722 |
| | — |
| | (18,411 | ) | | (2,258 | ) | | 294,230 |
|
Consolidated | | $ | 2,852,671 |
| | $ | (57,906 | ) | | $ | 42,184 |
| | $ | 49,926 |
| | $ | (73,551 | ) | | $ | 2,813,324 |
|
% Change | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | |
| | 0.3 | % | | 2.6 | % | | 0.8 | % | | (0.7 | %) | | 2.9 | % |
Europe Welding | | |
| | 1.9 | % | | — |
| | (0.9 | %) | | (1.9 | %) | | (0.9 | %) |
Asia Pacific Welding | | |
| | (6.6 | %) | | — |
| | 0.5 | % | | (2.4 | %) | | (8.4 | %) |
South America Welding | | |
| | (30.4 | %) | | — |
| | 29.3 | % | | (23.1 | %) | | (24.1 | %) |
The Harris Products Group | | |
| | 2.2 | % | | — |
| | (6.0 | %) | | (0.7 | %) | | (4.5 | %) |
Consolidated | | |
| | (2.0 | %) | | 1.5 | % | | 1.8 | % | | (2.6 | %) | | (1.4 | %) |
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