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): July 27, 2015
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 July 27, 2015, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended June 30, 2015. A copy of the Company’s press release issued on July 27, 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 July 27, 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) |
| | July 27, 2015 |
LINCOLN ELECTRIC HOLDINGS, INC.
INDEX TO EXHIBITS
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| | | |
| | |
Exhibit No. | | Exhibit |
| | |
99.1 |
| | The Company’s press release dated July 27, 2015. |
| | |
Exhibit 99.1
Investor Relations: Amanda Butler (216) 383-2534
Amanda_Butler@lincolnelectric.com
LINCOLN ELECTRIC REPORTS SECOND QUARTER 2015 RESULTS
Q2 EPS of $0.94, Adjusted EPS of $0.95
|
|
Second Quarter 2015 Key Metric Highlights |
§ Sales decreased 8.8% to $665 million, down 2.9% excluding unfavorable foreign exchange on weaker volumes |
§ Operating income margin of 14.6% of net sales, or 14.7% on an adjusted basis |
§ Net operating working capital at 18.0% of net sales |
§ Cash flows from operations for first half 2015 up 9.7% to $130 million |
|
CLEVELAND, Ohio, Monday, July 27, 2015 -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported second quarter 2015 net income of $70.9 million, or $0.94 diluted earnings per share (EPS). This compares with net income of $77.3 million, or EPS of $0.96 in the comparable 2014 period. Adjusted net income was $71.8 million, or Adjusted EPS of $0.95, compared to $81.5 million, or Adjusted EPS of $1.01, in the comparable 2014 period. The 2014 adjusted EPS includes $0.04 of earnings from our Venezuelan operations, which operates in a hyper-inflationary environment. This compares with earnings of $0.02 per share from our Venezuelan operations in the second quarter 2015.
Sales decreased 8.8% to $664.7 million in the second quarter 2015 versus $728.5 million in the comparable 2014 period primarily due to lower volumes and unfavorable foreign currency translation. Operating income for the second quarter decreased 13.8% to $96.8 million, or 14.6% of sales, from $112.3 million, or 15.4% of sales, in the comparable 2014 period. Adjusted operating income decreased 15.9% to $98.0 million or 14.7% of sales, compared with $116.6 million, or 16.0% of sales in 2014. The Company recognized charges to interest expense of $2.1 million or $0.03 per diluted share, representing adjustments in the quarter to the amount expected to be paid to acquire additional interests of a majority-owned subsidiary. Income taxes in the quarter ending June 30, 2015 include discrete tax benefits of $3.4 million, or $0.05 per diluted share. Operating Income and Adjusted operating income in the second quarter 2014 included a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.
Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "Business conditions were challenging in the quarter as growth in automation was offset by weaker oil and gas and U.S. export demand. We initiated a number of actions during the quarter to align our cost structure with softer market conditions, which helped generate modest sequential improvements in our profit margins and operating working capital ratio to net sales. While we remain cautious on 2015 demand trends, we continue to invest in our strategic programs and expect our efforts will help maximize profitability and share holder returns through the economic cycle."
Dividend and Share Repurchases
The Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share, which was paid on July 15, 2015 to shareholders of record as of June 30, 2015. During the quarter, the Company returned $55.6 million to shareholders through the repurchase of the Company’s common shares.
Six Months 2015 Summary
Net income for the six months ended June 30, 2015 was $139.3 million, or EPS of $1.82. This compares with net income of $133.8 million, or EPS of $1.65, in 2014. Adjusted net income for the six months ended June 30, 2015 was $140.2 million, or Adjusted EPS of $1.83, compared with Adjusted net income of $155.6 million, or Adjusted EPS of $1.92, in 2014. Adjusted net income for the six months ended June 30, 2015 includes earnings of $0.04 per diluted share from the Company's Venezuelan operations as compared with $0.18 per diluted share in the comparable 2014 period.
Lincoln Electric Reports Second Quarter 2015 Financial Results
Sales decreased 6.4% to $1.3 billion in the six months ended June 30, 2015 as compared with $1.4 billion in the comparable 2014 period. This result primarily reflects unfavorable foreign exchange translation. Operating income for the six months ended June 30, 2015 decreased to $187.3 million, or 14.2% of sales, compared with $192.7 million, or 13.6% of sales, in the comparable 2014 period. Adjusted operating income was $188.5 million or 14.3% of sales, compared with $214.7 million, or 15.2% of sales in 2014.
Webcast Information
A conference call to discuss second quarter 2015 financial results will be webcast live today, July 27, 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 76673627. Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.
Financial results for the second quarter 2015 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.
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 for the year ended December 31, 2014.
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Income
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| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three months ended June 30, | | Fav (Unfav) to Prior Year |
| | 2015 | | % of Sales | | 2014 | | % of Sales | | $ | | % |
Net sales | | $ | 664,740 |
| | 100.0 | % | | $ | 728,531 |
| | 100.0 | % | | $ | (63,791 | ) | | (8.8 | %) |
Cost of goods sold | | 438,959 |
| | 66.0 | % | | 478,264 |
| | 65.6 | % | | 39,305 |
| | 8.2 | % |
Gross profit | | 225,781 |
| | 34.0 | % | | 250,267 |
| | 34.4 | % | | (24,486 | ) | | (9.8 | %) |
Selling, general & administrative expenses | | 127,755 |
| | 19.2 | % | | 137,156 |
| | 18.8 | % | | 9,401 |
| | 6.9 | % |
Rationalization and asset impairment charges | | 1,239 |
| | 0.2 | % | | 836 |
| | 0.1 | % | | (403 | ) | | (48.2 | %) |
Operating income | | 96,787 |
| | 14.6 | % | | 112,275 |
| | 15.4 | % | | (15,488 | ) | | (13.8 | %) |
Interest income | | 738 |
| | 0.1 | % | | 924 |
| | 0.1 | % | | (186 | ) | | (20.1 | %) |
Equity earnings in affiliates | | 979 |
| | 0.1 | % | | 1,575 |
| | 0.2 | % | | (596 | ) | | (37.8 | %) |
Other income | | 317 |
| | — |
| | 1,078 |
| | 0.1 | % | | (761 | ) | | (70.6 | %) |
Interest expense | | (4,387 | ) | | (0.7 | %) | | (986 | ) | | (0.1 | %) | | (3,401 | ) | | (344.9 | %) |
Income before income taxes | | 94,434 |
| | 14.2 | % | | 114,866 |
| | 15.8 | % | | (20,432 | ) | | (17.8 | %) |
Income taxes | | 23,558 |
| | 3.5 | % | | 37,577 |
| | 5.2 | % | | 14,019 |
| | 37.3 | % |
Effective tax rate | | 24.9 | % | | |
| | 32.7 | % | | |
| | 7.8 | % | | |
Net income including non-controlling interests | | 70,876 |
| | 10.7 | % | | 77,289 |
| | 10.6 | % | | (6,413 | ) | | (8.3 | %) |
Non-controlling interests in subsidiaries’ loss | | (22 | ) | | — |
| | (43 | ) | | — |
| | 21 |
| | 48.8 | % |
Net income | | $ | 70,898 |
| | 10.7 | % | | $ | 77,332 |
| | 10.6 | % | | $ | (6,434 | ) | | (8.3 | %) |
| | | | | | | | | | | | |
Basic earnings per share | | $ | 0.95 |
| | |
| | $ | 0.97 |
| | |
| | $ | (0.02 | ) | | (2.1 | %) |
Diluted earnings per share | | $ | 0.94 |
| | |
| | $ | 0.96 |
| | |
| | $ | (0.02 | ) | | (2.1 | %) |
Weighted average shares (basic) | | 75,000 |
| | |
| | 79,873 |
| | |
| | |
| | |
|
Weighted average shares (diluted) | | 75,773 |
| | |
| | 80,773 |
| | |
| | |
| | |
|
| | Six months ended June 30, | | Fav (Unfav) to Prior Year |
| | 2015 | | % of Sales | | 2014 | | % of Sales | | $ | | % |
Net sales | | $ | 1,322,640 |
| | 100.0 | % | | $ | 1,413,593 |
| | 100.0 | % | | $ | (90,953 | ) | | (6.4 | %) |
Cost of goods sold | | 876,469 |
| | 66.3 | % | | 936,990 |
| | 66.3 | % | | 60,521 |
| | 6.5 | % |
Gross profit | | 446,171 |
| | 33.7 | % | | 476,603 |
| | 33.7 | % | | (30,432 | ) | | (6.4 | %) |
Selling, general & administrative expenses | | 257,646 |
| | 19.5 | % | | 283,071 |
| | 20.0 | % | | 25,425 |
| | 9.0 | % |
Rationalization and asset impairment charges | | 1,239 |
| | 0.1 | % | | 819 |
| | 0.1 | % | | (420 | ) | | 51.3 | % |
Operating income | | 187,286 |
| | 14.2 | % | | 192,713 |
| | 13.6 | % | | (5,427 | ) | | (2.8 | %) |
Interest income | | 1,331 |
| | 0.1 | % | | 1,838 |
| | 0.1 | % | | (507 | ) | | (27.6 | %) |
Equity earnings in affiliates | | 1,828 |
| | 0.1 | % | | 3,136 |
| | 0.2 | % | | (1,308 | ) | | (41.7 | %) |
Other income | | 2,927 |
| | 0.2 | % | | 2,161 |
| | 0.2 | % | | 766 |
| | 35.4 | % |
Interest expense | | (6,231 | ) | | (0.5 | %) | | (2,556 | ) | | (0.2 | %) | | (3,675 | ) | | (143.8 | %) |
Income before income taxes | | 187,141 |
| | 14.1 | % | | 197,292 |
| | 14.0 | % | | (10,151 | ) | | (5.1 | %) |
Income taxes | | 47,947 |
| | 3.6 | % | | 63,579 |
| | 4.5 | % | | 15,632 |
| | 24.6 | % |
Effective tax rate | | 25.6 | % | | |
| | 32.2 | % | | |
| | 6.6 | % | | |
Net income including non-controlling interests | | 139,194 |
| | 10.5 | % | | 133,713 |
| | 9.5 | % | | 5,481 |
| | 4.1 | % |
Non-controlling interests in subsidiaries’ loss | | (58 | ) | | — |
| | (72 | ) | | — |
| | 14 |
| | 19.4 | % |
Net income | | $ | 139,252 |
| | 10.5 | % | | $ | 133,785 |
| | 9.5 | % | | $ | 5,467 |
| | 4.1 | % |
| | | | | | | | | | | | |
Basic earnings per share | | $ | 1.84 |
| | |
| | $ | 1.67 |
| | |
| | $ | 0.17 |
| | 10.2 | % |
Diluted earnings per share | | $ | 1.82 |
| | |
| | $ | 1.65 |
| | |
| | $ | 0.17 |
| | 10.3 | % |
Weighted average shares (basic) | | 75,621 |
| | |
| | 80,260 |
| | |
| | |
| | |
|
Weighted average shares (diluted) | | 76,416 |
| | |
| | 81,194 |
| | |
| | |
| | |
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Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Non-GAAP Financial Measures
|
| | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Operating income as reported | | $ | 96,787 |
| | $ | 112,275 |
| | $ | 187,286 |
| | $ | 192,713 |
|
Special items (pre-tax): | | | | | | |
| | |
|
Rationalization and asset impairment charges (1) | | 1,239 |
| | 836 |
| | 1,239 |
| | 819 |
|
Venezuela foreign exchange losses (2) | | — |
| | 3,468 |
| | — |
| | 21,133 |
|
Adjusted operating income (3) | | $ | 98,026 |
| | $ | 116,579 |
| | $ | 188,525 |
| | $ | 214,665 |
|
| | | | | | | | |
Net income as reported | | $ | 70,898 |
| | $ | 77,332 |
| | $ | 139,252 |
| | $ | 133,785 |
|
Special items (after-tax): | | |
| | |
| | |
| | |
|
Rationalization and asset impairment charges (1) | | 900 |
| | 698 |
| | 900 |
| | 691 |
|
Venezuela foreign exchange losses (2) | | — |
| | 3,468 |
| | — |
| | 21,133 |
|
Adjusted net income (3) | | $ | 71,798 |
| | $ | 81,498 |
| | $ | 140,152 |
| | $ | 155,609 |
|
| | | | | | | | |
Diluted earnings per share as reported | | $ | 0.94 |
| | $ | 0.96 |
| | $ | 1.82 |
| | $ | 1.65 |
|
Special items | | 0.01 |
| | 0.05 |
| | 0.01 |
| | 0.27 |
|
Adjusted diluted earnings per share (3) | | $ | 0.95 |
| | $ | 1.01 |
| | $ | 1.83 |
| | $ | 1.92 |
|
| | | | | | | | |
Weighted average shares (diluted) | | 75,773 |
| | 80,773 |
| | 76,416 |
| | 81,194 |
|
| |
(1) | The three and six months ended June 30, 2015 and 2014 include net charges primarily related to severance and other related costs. Rationalization charges in 2014 are partially offset by gains related to the sale of assets at rationalized operations. |
| |
(2) | The three and six months ended June 30, 2014 represents the impact of the Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism. |
| |
(3) | 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
|
| | | | | | | | |
Selected Consolidated Balance Sheet Data | | June 30, 2015 | | December 31, 2014 |
Cash and cash equivalents | | $ | 312,737 |
| | $ | 278,379 |
|
Total current assets | | 1,089,236 |
| | 1,098,677 |
|
Property, plant and equipment, net | | 429,329 |
| | 437,209 |
|
Total assets | | 1,950,166 |
| | 1,939,215 |
|
Total current liabilities | | 470,556 |
| | 492,419 |
|
Short-term debt (1) | | 62,595 |
| | 68,166 |
|
Long-term debt | | 151,563 |
| | 2,488 |
|
Total equity | | 1,196,658 |
| | 1,285,781 |
|
| | | | |
Net Operating Working Capital | | June 30, 2015 | | December 31, 2014 |
Accounts receivable | | $ | 329,223 |
| | $ | 321,862 |
|
Inventory | | 321,723 |
| | 330,840 |
|
Trade accounts payable | | 172,114 |
| | 202,482 |
|
Net operating working capital | | $ | 478,832 |
| | $ | 450,220 |
|
| | | | |
Net operating working capital to net sales (2) | | 18.0 | % | | 16.5 | % |
| | | | |
Invested Capital | | June 30, 2015 | | December 31, 2014 |
Short-term debt (1) | | $ | 62,595 |
| | $ | 68,166 |
|
Long-term debt | | 151,563 |
| | 2,488 |
|
Total debt | | 214,158 |
| | 70,654 |
|
Total equity | | 1,196,658 |
| | 1,285,781 |
|
Invested capital | | $ | 1,410,816 |
| | $ | 1,356,435 |
|
| | | | |
Total debt / invested capital | | 15.2 | % | | 5.2 | % |
Return on invested capital (3) | | 18.9 | % | | 19.1 | % |
| |
(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 June 30, |
| | 2015 | | 2014 |
OPERATING ACTIVITIES: | | |
| | |
|
Net income | | $ | 70,898 |
| | $ | 77,332 |
|
Non-controlling interests in subsidiaries’ loss | | (22 | ) | | (43 | ) |
Net income including non-controlling interests | | 70,876 |
| | 77,289 |
|
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | | |
| | |
|
Rationalization and asset impairment charges | | — |
| | 894 |
|
Depreciation and amortization | | 15,686 |
| | 17,969 |
|
Equity earnings in affiliates, net | | (272 | ) | | (701 | ) |
Pension expense | | 4,925 |
| | 2,676 |
|
Pension contributions and payments | | (26,471 | ) | | (2,083 | ) |
Other non-cash items, net | | 12,772 |
| | (3,325 | ) |
Changes in operating assets and liabilities, net of effects from acquisitions: | | |
| | |
|
Decrease in accounts receivable | | 11,695 |
| | 544 |
|
Decrease (increase) in inventories | | 17,773 |
| | (2,298 | ) |
Decrease in trade accounts payable | | (18,301 | ) | | (3,341 | ) |
Net change in other current assets and liabilities | | (11,234 | ) | | 21,833 |
|
Net change in other long-term assets and liabilities | | (163 | ) | | (4,483 | ) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | | 77,286 |
| | 104,974 |
|
| | | | |
INVESTING ACTIVITIES: | | |
| | |
|
Capital expenditures | | (16,761 | ) | | (25,441 | ) |
Proceeds from sale of property, plant and equipment | | 234 |
| | 4,443 |
|
Other investing activities | | — |
| | 205 |
|
NET CASH USED BY INVESTING ACTIVITIES | | (16,527 | ) | | (20,793 | ) |
| | | | |
FINANCING ACTIVITIES: | | |
| | |
|
Net change in borrowings | | 42,540 |
| | (2,087 | ) |
Proceeds from exercise of stock options | | 2,303 |
| | 1,054 |
|
Excess tax benefits from stock-based compensation | | 756 |
| | 826 |
|
Purchase of shares for treasury | | (55,615 | ) | | (68,312 | ) |
Cash dividends paid to shareholders | | (21,919 | ) | | (18,496 | ) |
Other financing activities | | (7,976 | ) | | — |
|
NET CASH USED BY FINANCING ACTIVITIES | | (39,911 | ) | | (87,015 | ) |
| | | | |
Effect of exchange rate changes on Cash and cash equivalents | | 2,872 |
| | 1,732 |
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | 23,720 |
| | (1,102 | ) |
Cash and cash equivalents at beginning of period | | 289,017 |
| | 205,387 |
|
Cash and cash equivalents at end of period | | $ | 312,737 |
| | $ | 204,285 |
|
| | | | |
Cash dividends paid per share | | $ | 0.29 |
| | $ | 0.23 |
|
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
|
| | | | | | | | |
| | Six months ended June 30, |
| | 2015 | | 2014 |
OPERATING ACTIVITIES: | | |
| | |
|
Net income | | $ | 139,252 |
| | $ | 133,785 |
|
Non-controlling interests in subsidiaries’ loss | | (58 | ) | | (72 | ) |
Net income including non-controlling interests | | 139,194 |
| | 133,713 |
|
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | | |
| | |
|
Rationalization and asset impairment charges | | 30 |
| | 859 |
|
Depreciation and amortization | | 31,718 |
| | 35,900 |
|
Equity earnings in affiliates, net | | (488 | ) | | (1,497 | ) |
Pension expense | | 10,604 |
| | 5,476 |
|
Pension contributions and payments | | (47,705 | ) | | (24,164 | ) |
Other non-cash items, net | | (5,790 | ) | | 20,659 |
|
Changes in operating assets and liabilities, net of effects from acquisitions: | | |
| | |
|
Increase in accounts receivable | | (13,682 | ) | | (43,341 | ) |
Decrease (increase) in inventories | | 1,540 |
| | (17,455 | ) |
Decrease in trade accounts payable | | (31,217 | ) | | (15,449 | ) |
Net change in other current assets and liabilities | | 43,835 |
| | 27,380 |
|
Net change in other long-term assets and liabilities | | 2,031 |
| | (3,476 | ) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | | 130,070 |
| | 118,605 |
|
| | | | |
INVESTING ACTIVITIES: | | |
| | |
|
Capital expenditures | | (29,217 | ) | | (39,947 | ) |
Acquisition of businesses, net of cash acquired | | — |
| | (892 | ) |
Proceeds from sale of property, plant and equipment | | 1,421 |
| | 5,509 |
|
Other investing activities | | 2,024 |
| | 778 |
|
NET CASH USED BY INVESTING ACTIVITIES | | (25,772 | ) | | (34,552 | ) |
| | | | |
FINANCING ACTIVITIES: | | |
| | |
|
Net change in borrowings | | 144,050 |
| | (10,143 | ) |
Proceeds from exercise of stock options | | 4,036 |
| | 4,010 |
|
Excess tax benefits from stock-based compensation | | 1,293 |
| | 2,478 |
|
Purchase of shares for treasury | | (158,468 | ) | | (119,333 | ) |
Cash dividends paid to shareholders | | (44,248 | ) | | (37,119 | ) |
Other financing activities | | (7,996 | ) | | (2,330 | ) |
NET CASH USED BY FINANCING ACTIVITIES | | (61,333 | ) | | (162,437 | ) |
| | | | |
Effect of exchange rate changes on Cash and cash equivalents | | (8,607 | ) | | (17,156 | ) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | 34,358 |
| | (95,540 | ) |
Cash and cash equivalents at beginning of period | | 278,379 |
| | 299,825 |
|
Cash and cash equivalents at end of period | | $ | 312,737 |
| | $ | 204,285 |
|
| | | | |
Cash dividends paid per share | | $ | 0.58 |
| | $ | 0.46 |
|
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 June 30, 2015 | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 415,075 |
| | $ | 90,903 |
| | $ | 49,043 |
| | $ | 37,907 |
| | $ | 71,812 |
| | $ | — |
| | $ | 664,740 |
|
Inter-segment sales | | 25,613 |
| | 4,463 |
| | 2,964 |
| | 118 |
| | 2,716 |
| | (35,874 | ) | | — |
|
Total | | $ | 440,688 |
| | $ | 95,366 |
| | $ | 52,007 |
| | $ | 38,025 |
| | $ | 74,528 |
| | $ | (35,874 | ) | | $ | 664,740 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 77,494 |
| | $ | 8,242 |
| | $ | 2,244 |
| | $ | 1,378 |
| | $ | 8,250 |
| | $ | 475 |
| | $ | 98,083 |
|
As a percent of total sales | | 17.6 | % | | 8.6 | % | | 4.3 | % | | 3.6 | % | | 11.1 | % | | |
| | 14.8 | % |
Special items charge (gain) (2) | | $ | — |
| | $ | 1,239 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1,239 |
|
EBIT, as adjusted (4) | | $ | 77,494 |
| | $ | 9,481 |
| | $ | 2,244 |
| | $ | 1,378 |
| | $ | 8,250 |
| | $ | 475 |
| | $ | 99,322 |
|
As a percent of total sales | | 17.6 | % | | 9.9 | % | | 4.3 | % | | 3.6 | % | | 11.1 | % | | |
| | 14.9 | % |
Three months ended June 30, 2014 | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 429,490 |
| | $ | 115,574 |
| | $ | 66,997 |
| | $ | 39,051 |
| | $ | 77,419 |
| | $ | — |
| | $ | 728,531 |
|
Inter-segment sales | | 33,360 |
| | 5,494 |
| | 3,600 |
| | 35 |
| | 2,262 |
| | (44,751 | ) | | — |
|
Total | | $ | 462,850 |
| | $ | 121,068 |
| | $ | 70,597 |
| | $ | 39,086 |
| | $ | 79,681 |
| | $ | (44,751 | ) | | $ | 728,531 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 91,216 |
| | $ | 13,934 |
| | $ | 473 |
| | $ | 1,527 |
| | $ | 7,178 |
| | $ | 600 |
| | $ | 114,928 |
|
As a percent of total sales | | 19.7 | % | | 11.5 | % | | 0.7 | % | | 3.9 | % | | 9.0 | % | | |
| | 15.8 | % |
Special items charge (gain) (3) | | $ | (21 | ) | | $ | 965 |
| | $ | (108 | ) | | $ | 3,468 |
| | $ | — |
| | $ | — |
| | $ | 4,304 |
|
EBIT, as adjusted (4) | | $ | 91,195 |
| | $ | 14,899 |
| | $ | 365 |
| | $ | 4,995 |
| | $ | 7,178 |
| | $ | 600 |
| | $ | 119,232 |
|
As a percent of total sales | | 19.7 | % | | 12.3 | % | | 0.5 | % | | 12.8 | % | | 9.0 | % | | |
| | 16.4 | % |
Six months ended June 30, 2015 | | | | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 828,063 |
| | $ | 179,319 |
| | $ | 98,293 |
| | $ | 75,337 |
| | $ | 141,628 |
| | $ | — |
| | $ | 1,322,640 |
|
Inter-segment sales | | 51,742 |
| | 8,056 |
| | 6,234 |
| | 118 |
| | 4,727 |
| | (70,877 | ) | | — |
|
Total | | $ | 879,805 |
| | $ | 187,375 |
| | $ | 104,527 |
| | $ | 75,455 |
| | $ | 146,355 |
| | $ | (70,877 | ) | | $ | 1,322,640 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 148,678 |
| | $ | 16,990 |
| | $ | 5,372 |
| | $ | 4,528 |
| | $ | 15,799 |
| | $ | 674 |
| | $ | 192,041 |
|
As a percent of total sales | | 16.9 | % | | 9.1 | % | | 5.1 | % | | 6.0 | % | | 10.8 | % | | |
| | 14.5 | % |
Special items charge (gain) (2) | | $ | — |
| | $ | 1,239 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1,239 |
|
EBIT, as adjusted (4) | | $ | 148,678 |
| | $ | 18,229 |
| | $ | 5,372 |
| | $ | 4,528 |
| | $ | 15,799 |
| | $ | 674 |
| | $ | 193,280 |
|
As a percent of total sales | | 16.9 | % | | 9.7 | % | | 5.1 | % | | 6.0 | % | | 10.8 | % | | |
| | 14.6 | % |
Six months ended June 30, 2014 | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Net sales | | $ | 831,396 |
| | $ | 220,980 |
| | $ | 128,283 |
| | $ | 83,044 |
| | $ | 149,890 |
| | $ | — |
| | $ | 1,413,593 |
|
Inter-segment sales | | 66,303 |
| | 11,354 |
| | 8,049 |
| | 64 |
| | 4,380 |
| | (90,150 | ) | | — |
|
Total | | $ | 897,699 |
| | $ | 232,334 |
| | $ | 136,332 |
| | $ | 83,108 |
| | $ | 154,270 |
| | $ | (90,150 | ) | | $ | 1,413,593 |
|
| | | | | | | | | | | | | | |
EBIT (1) | | $ | 162,627 |
| | $ | 23,187 |
| | $ | (158 | ) | | $ | (4,373 | ) | | $ | 13,236 |
| | $ | 3,491 |
| | $ | 198,010 |
|
As a percent of total sales | | 18.1 | % | | 10.0 | % | | (0.1 | %) | | (5.3 | %) | | 8.6 | % | | |
| | 14.0 | % |
Special items charge (gain) (3) | | $ | (68 | ) | | $ | 1,004 |
| | $ | (117 | ) | | $ | 21,133 |
| | $ | — |
| | $ | — |
| | $ | 21,952 |
|
EBIT, as adjusted (4) | | $ | 162,559 |
| | $ | 24,191 |
| | $ | (275 | ) | | $ | 16,760 |
| | $ | 13,236 |
| | $ | 3,491 |
| | $ | 219,962 |
|
As a percent of total sales | | 18.1 | % | | 10.4 | % | | (0.2 | %) | | 20.2 | % | | 8.6 | % | | |
| | 15.6 | % |
| |
(1) | EBIT is defined as Operating income plus Equity earnings in affiliates and Other income. |
| |
(2) | Special items in the three and six months ended June 30, 2015 represent rationalization charges related to employee severance and other related costs. |
| |
(3) | Special items in the three and six months ended June 30, 2014 include net charges primarily related to severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets at rationalized operations and the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism. |
| |
(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 June 30th Change in Net Sales by Segment |
| | | | | | |
| | | | Change in Net Sales due to: | | |
| | Net Sales 2014 | | Volume | | Acquisitions | | Price | | Foreign Exchange | | Net Sales 2015 |
Operating Segments | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | $ | 429,490 |
| | $ | (21,853 | ) | | $ | 14,250 |
| | $ | 1,457 |
| | $ | (8,269 | ) | | $ | 415,075 |
|
Europe Welding | | 115,574 |
| | (3,343 | ) | | — |
| | (582 | ) | | (20,746 | ) | | 90,903 |
|
Asia Pacific Welding | | 66,997 |
| | (15,292 | ) | | — |
| | (617 | ) | | (2,045 | ) | | 49,043 |
|
South America Welding | | 39,051 |
| | (8,601 | ) | | — |
| | 15,696 |
| | (8,239 | ) | | 37,907 |
|
The Harris Products Group | | 77,419 |
| | 1,743 |
| | — |
| | (3,981 | ) | | (3,369 | ) | | 71,812 |
|
Consolidated | | $ | 728,531 |
| | $ | (47,346 | ) | | $ | 14,250 |
| | $ | 11,973 |
| | $ | (42,668 | ) | | $ | 664,740 |
|
% Change | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | |
| | (5.1 | %) | | 3.3 | % | | 0.3 | % | | (1.9 | %) | | (3.4 | %) |
Europe Welding | | |
| | (2.9 | %) | | — |
| | (0.5 | %) | | (18.0 | %) | | (21.3 | %) |
Asia Pacific Welding | | |
| | (22.8 | %) | | — |
| | (0.9 | %) | | (3.1 | %) | | (26.8 | %) |
South America Welding | | |
| | (22.0 | %) | | — |
| | 40.2 | % | | (21.1 | %) | | (2.9 | %) |
The Harris Products Group | | |
| | 2.3 | % | | — |
| | (5.1 | %) | | (4.4 | %) | | (7.2 | %) |
Consolidated | | |
| | (6.5 | %) | | 2.0 | % | | 1.6 | % | | (5.9 | %) | | (8.8 | %) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Six Months Ended June 30th Change in Net Sales by Segment |
| | | | | | |
| | | | Change in Net Sales due to: | | |
| | Net Sales 2014 | | Volume | | Acquisitions | | Price | | Foreign Exchange | | Net Sales 2015 |
Operating Segments | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | $ | 831,396 |
| | $ | (20,926 | ) | | $ | 26,721 |
| | $ | 5,480 |
| | $ | (14,608 | ) | | $ | 828,063 |
|
Europe Welding | | 220,980 |
| | (141 | ) | | — |
| | (883 | ) | | (40,637 | ) | | 179,319 |
|
Asia Pacific Welding | | 128,283 |
| | (24,395 | ) | | — |
| | (1,286 | ) | | (4,309 | ) | | 98,293 |
|
South America Welding | | 83,044 |
| | (13,294 | ) | | — |
| | 37,170 |
| | (31,583 | ) | | 75,337 |
|
The Harris Products Group | | 149,890 |
| | 6,217 |
| | — |
| | (8,570 | ) | | (5,909 | ) | | 141,628 |
|
Consolidated | | $ | 1,413,593 |
| | $ | (52,539 | ) | | $ | 26,721 |
| | $ | 31,911 |
| | $ | (97,046 | ) | | $ | 1,322,640 |
|
% Change | | |
| | |
| | |
| | |
| | |
| | |
|
North America Welding | | |
| | (2.5 | %) | | 3.2 | % | | 0.7 | % | | (1.8 | %) | | (0.4 | %) |
Europe Welding | | |
| | (0.1 | %) | | — |
| | (0.4 | %) | | (18.4 | %) | | (18.9 | %) |
Asia Pacific Welding | | |
| | (19.0 | %) | | — |
| | (1.0 | %) | | (3.4 | %) | | (23.4 | %) |
South America Welding | | |
| | (16.0 | %) | | — |
| | 44.8 | % | | (38.0 | %) | | (9.3 | %) |
The Harris Products Group | | |
| | 4.1 | % | | — |
| | (5.7 | %) | | (3.9 | %) | | (5.5 | %) |
Consolidated | | |
| | (3.7 | %) | | 1.9 | % | | 2.3 | % | | (6.9 | %) | | (6.4 | %) |
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