Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Q4 2023 Earnings Presentation
19 slides from Lincoln Electric's earnings presentation, Feb 15, 2024
Slide 1: Q4 & Full Year 2023 Earnings
February 15, 2024 LINCOLN ELECTRIC HOLDINGS, INC. Q4 & Full Year 2023 Earnings
Slide 2: Safe Harbor and Regulation G Disclosures
Safe Harbor and Regulation G Disclosures Forward-Looking Statements: Non-GAAP Measures: Statements made during this presentation which are not Our management uses non-GAAP financial measures in historical facts may be considered forward-looking statements. assessing and evaluating the Company’s perf
Slide 3: Full Year 2023 Highlights
Full Year 2023 $4.2B 24.1% Highlights: Record 2023 sales Record Adjusted ROIC performance +11% vs. prior year; Organic sales +4% +140 bps vs. prior year Record financial performance advances us towards our Higher 17.1% $668M Standard 2025 Strategy Record 2023 Adjusted Operating Record Cash flow from
Slide 4: Higher Standard 2025 Strategy Check-in
Higher Standard Financial Metric 2020-2025 Strategy Target 2020-2023 Achievement Sales CAGR (ex-FX) High single-digit to Low-double digit % 12%* 2025 Strategy Average Adjusted Operating Income Margin 16% (+/- 150 bps) 15.3% average Check-in: Americas Welding EBIT margin International Welding EBIT ma
Slide 5: Q4 organic sales growth reflects continued momentum in capital spending
Q4 Organic sales growth reflects continued momentum in capital spending across most industrial end markets Q4 Organic sales increased 2.6% led by Automation Q4 global end sector performance1 Welding segments’ organic 4 of 5 end markets growing, led by growth led by capital spending Construction/Infr
Slide 6: Income Statement – Q4 2023
Income Statement – Q4 2023 YoY % Change $ in Millions Q4 2023 % of Sales Q4 2022 % of Sales Fav/ (Unfav) Net Sales $ 1,058.5 $ 930.9 13.7% Gross Profit 371.0 35.1% 308.0 33.1% 20.5% SG&A 188.9 17.8% 164.1 17.6% (15.1)% Operating Income 204.0 19.3% 141.5 15.2% 44.2% Special item (gains)/charges1,2 (2
Slide 7: Americas Welding Segment
Americas Welding Segment % YoY ($ in Millions) Q4 2023 Q4 2022 Volume growth led by Change automation demand; Net Sales $ 654.7 $ 573.6 14.1% partially offset by compressing industrial activity in portions of Adjusted EBIT $ 129.5 $ 114.4 13.2% South America. Adjusted EBIT Margin2 18.8% 19.0% (20) b
Slide 8: International Welding Segment
International Welding Segment % YoY ($ in Millions) Q4 2023 Q4 2022 Change Volumes higher across EMEA and Asia Pacific led Net Sales $ 292.2 $ 243.1 20.2% by Automation and strong project activity in the Middle East, India and Adjusted EBIT $ 42.9 $ 22.8 87.8% portions of Asia Pacific. Adjusted EBIT
Slide 9: The Harris Products Group
The Harris Products Group % YoY Volumes primarily reflect ($ in Millions) Q4 2023 Q4 2022 Change soft residential-oriented applications (HVAC, Net Sales $ 111.6 $ 114.2 (2.3)% plumbing). Adjusted EBIT $ 15.2 $ 12.1 26.5% Price reflects actions taken to mitigate inflation and changes in metal Adjuste
Slide 10: Cash Flow From Operations Metrics
Cash Flow From Operations Metrics Cash Flow from Operations Average Operating Working ($ in Millions) Capital to Net Sales Ratio +74% $668 Record FY2023 Cash Flow generation with 105% cash conversion1. 20.9% $383 18.6% Improved working (ex-Fori) 17.1% capital efficiency as inventory levels normalize
Slide 11: Capital Allocation
Capital Allocation1 ($ in Millions) $820 Q4 Capital Allocation & Returns 181 • Growth: $25 million 131 • Return to Shareholders: $105 million $491 $471 25 • Dividend Rate: +14.3% 32 • Return on Invested Capital2: 24.1% (record) 199 436 Capital Allocation Strategy 414 148 $130 68 33 Prioritized uses
Slide 12: Full Year 2024 Assumptions
Full Year 2024 Assumptions Assumptions Risks Low- to Mid-single digit % organic sales Economic and geopolitical headwinds growth Inflation (raw materials & labor) Neutral price/cost Low-to-mid 20% incremental operating income margin Opportunities (not in assumptions) $45 to $50 million interest expe
Slide 13: Contact
Contact: Amanda Butler Vice President, Investor Relations & Communications Amanda_Butler@lincolnelectric.com 216.383.2534 13 13
Slide 14: Non-GAAP Information
Non-GAAP Information Adjusted operating income, Adjusted net income, Adjusted EBIT, EBITDA, Adjusted EBITDA, Adjusted effective tax rate, Adjusted diluted earnings per share, Adjusted EPS, Organic sales, Cash conversion, and Adjusted Return on invested capital are non-GAAP financial measures. Manage
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures: Reconciliation of Operating Income, Net Income, Effective Tax Rate, and EPS to Non-GAAP Adjusted Operating Income, Adjusted Net Income, Adjusted Effective Tax Rate, and Adjusted EPS (In thousands, except per share amounts) (Unaudited) 15 Pleas
Slide 16: Non-GAAP Financial Measures (continued)
Non-GAAP Financial 1) Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate and adjusted Measures diluted EPS are non-GAAP financial measures. Refer to Non-GAAP Information section. (continued) 2) 2023 gain is primarily related to the sale of a property partially
Slide 17: Adjusted Return on Invested Capital (ROIC)
Non-GAAP Financial Measures Adjusted Return on Invested Capital (ROIC) (In thousands) (Unaudited) 1) Adjusted net operating profit after taxes and Adjusted ROIC are non-GAAP financial measures. Refer to Non-GAAP Information section. 2) Includes the net tax impact of Special items recorded during the
Slide 18: Segment EBIT
Segment EBIT EBIT and Adjusted EBIT Reconciliation – Three Months Ended December 31, 2023 (In thousands) (Unaudited) 18 Please see the following slide for corresponding footnotes
Slide 19: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures 1) EBIT is defined as Operating income plus Other income (expense). (continued) 2) The primary profit measure used by management to assess segment performance is Adjusted EBIT. EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT. Footnote
Lincoln Electric Holdings — Q4 2023 Earnings Presentation on 6ix