Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Non-Deal Roadshow (February 2022)
25 slides from Lincoln Electric's roadshow presentation, Feb 24, 2022
Slide 1: Lincoln Electric Holdings, Inc. Overview Virtual Nondeal Roadshow
Lincoln Electric Holdings, Inc. Overview Virtual Nondeal Roadshow May 3, 2021 Gabe Bruno EVP & Chief Financial Officer February 24 2022 LINCOLN ELECTRIC HOLDINGS, INC. Over view Exhibit 99.1
Slide 2: Safe Harbor and Regulation G Disclosures
Safe Harbor and Regulation G Disclosures Forward-Looking Statements: 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 ma
Slide 3: High-Performance Industry Leader Targeting Superior Value Through the Cycle
High-Performance Industry Leader Targeting Superior Value Through the Cycle #1 Leader in Growing Arc Welding & Cutting Industry Innovation & Operational Excellence Advances Profitability Strong Cash Generation Through the Cycle Earnings Compounder Through the Cycle Disciplined Capital Deployment Del
Slide 4: 125+ Years of Market-Leading Solutions
125+ Years of Market-Leading Solutions Broadest Portfolio of Solutions in the Industry FILLER METALS ARC WELDING EQUIPMENT ACCESSORIES (PPE, FUME, GUNS, TOOLS) CUTTING SOLUTIONS DIGITAL SOLUTIONS AUTOMATION INTEGRATION SERVICES AUTOMATED WELDING & CUTTING ANCILLARY AUTOMATED FUNCTIONS & CELL COMPONE
Slide 5: Diversified Products and Reach
Diversified Products and Reach Net Sales by Product Area1 Net Sales by Segment1 Americas Welding Harris Products Group International Welding Consumables (filler metals) Equipment (includes automation) 1 Reflects FY2021 revenue Americas Welding includes North and South American welding and cutting so
Slide 6: Leading Provider Across Diverse End Markets
Leading Provider Across Diverse End Markets LECO is one of only three global providers to offer a complete solution 15% to 20% of revenue serves infrastructure and renewables applications $20B Global Arc Welding, Brazing & Cutting Industry Market Share Estimates1 Lincoln Electric Revenue Mix by End
Slide 7: Higher Standard 2025 Strategy and High-Performance Culture Generates Superior Value
Higher Standard 2025 Strategy and High-Performance Culture Generates Superior Value Lincoln Business System (LBS) EH&S commitment Training & development ~57% 2021 equipment sales from new products Automation leader Broadest product portfolio & expertise Growth initiatives Key growth driver Proven in
Slide 8: Accelerating Growth in a Favorable Industrial Cycle
Accelerating Growth in a Favorable Industrial Cycle Accelerate growth: innovation, automation, additive, and M&A Increase profitability: +200 bps to average adjusted operating income margin vs. last cycle on operational excellence Maintain high-performing ROIC and working capital performance Advance
Slide 9: High Single-Digit to Low Double-Digit % Sales CAGR (2020-2025)
High Single-Digit % to Low Double-Digit % Sales CAGR (2020-2025) +300-400 bps +200-300 bps +100-200 bps Industrial Production New Initiatives / Innovation Automation / Additive Anticipated M&A Robust Topline Growth More than 2x growth expected vs. underlying market * graph is not to scale.
Slide 10: Attractive Trends Drive Growth
Attractive Trends Drive Growth Industrial Sector Tailwinds Labor Shortage Automation offering services customer growth and reshoring Education solutions train new and upskill professional welders Easy-to-use “Ready.Set.Weld” technology helps new welders achieve higher productivity and quality Renewa
Slide 11: Adoption of Automation Accelerates Growth
Adoption of Automation Accelerates Growth Leading automation offering places LECO at the forefront of industry transformation 2025 Target: Double sales to $1 billion and adjusted operating income margin to mid-teens percent Automation demand driven by customers need to: Address labor and capacity co
Slide 12: Leading Innovation and End Sector Expertise Drives Growth
Leading Innovation and End Sector Expertise Drives Growth Extensive R&D platform and 500+ technical sales & industry application experts Areas of Innovation That Address Customers’ Operational Challenges Expand capacity despite labor shortages Quality assurance to reduce costs Improve safety Improve
Slide 13: Solutions Engineered to Deliver Measurable Value
Solutions Engineered to Deliver Measurable Value
Slide 14: Disciplined Acquisition Program Creates Value
Disciplined Acquisition Program Creates Value Acquisitions are a core growth driver of our Higher Standard 2025 Strategy Mid-Teens $786M Cumulative M&A Investment 2012 - 2021 21 Doubled 3.3% Dedicated Acquisitions and company-wide integrations executed 2012 - 2021 Addressable market size with additi
Slide 15: Operational Initiatives Advance Margin Improvement
Operational Initiatives Advance 200 bps Margin Improvement (vs. prior cycle average) Safety-focused operating plan emphasizes reduction in emissions, energy intensity, waste and water use Lean initiatives and broad six-sigma training advances continuous improvement and productivity Lincoln Business
Slide 16: Strong Cash Generation and Top Quartile ROIC
Strong Cash Generation and Top Quartile ROIC Cash Flow From Operations ($M) & Cash Conversion (%) Return on Invested Capital (ROIC) 104% Average Cash Conversion 20.5% Average ROIC Cash Conversion is defined as Cash Flow from Operations less Capital Expenditures divided by Adjusted Net Income
Slide 17: Growth and Return Focused Capital Allocation Strategy
Growth and Return Focused Capital Allocation Strategy DISCIPLINED ACQUISITIONS CONSECUTIVE 26-YEAR DIVIDEND INCREASE Opportunistic Share Repurchases Investment grade PROFILE balance Sheet Prioritizing Growth Investments Growth: capital expenditure and acquisitions Return to Shareholders: share repur
Slide 18: Protecting the Environment at Every Step
Protecting the Environment at Every Step Water Use 2025 Goal: 14% Reduction vs. 2018 21% Reduction (2021 vs. 2018) Energy Intensity 2025 Goal: 16.2% Reduction vs. 2018 7% Increase* (2021 vs. 2018) GHG Emissions 2025 Goal: 10% Reduction vs. 2018 18% Reduction (2021 vs. 2018) Landfill Avoidance 2025 G
Slide 19: Strong Social and Governance Track Record
Strong Social and Governance Track Record 3 Female Directors1 4 44% New Directors in the Last 5 Years1 Global training and development platform Gender & Ethnically Diverse Independent Directors1 Oversight Board oversight of ESG and D&I with integrated metrics in the Chairman & CEO’s annual goals and
Slide 20: Proven Strategy and High-Performance Culture Generates Superior Value
Proven Strategy and High-Performance Culture Generates Superior Value Lincoln Business System (LBS) EH&S commitment Training & development ~57% 2021 equipment sales from new products Automation leader Broadest product portfolio & expertise Growth initiatives Key growth driver Proven integration proc
Slide 21: Contact: Amanda Butler
Contact: Amanda Butler Vice President, Investor Relations & Communications Amanda_Butler@lincolnelectric.com 216.383.2534
Slide 22: 2025 Strategy Advances Performance vs. Prior Cycles
Sales CAGR 19% 13%1 4%1 High Single-Digit to Low Double-Digit % CAGR Average Adjusted Operating Margin 10.3% 11.7% 13.7% 16% (+/- 150 bps) Adjusted EPS CAGR 32% 45% 8% High Teens to Low 20% Average ROIC 14.8% 14.6% 18.9% (top quartile) 18% to 20% (top quartile) Average Operating Working Capital 24.8
Slide 23: Non-GAAP Information
Non-GAAP Information Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Organic sales, Cash conversion, and Return on invested capital are non-GAAP financial measures. Management uses non-GAAP measures to assess the Compan
Slide 24: Adjusted Operating Income Reconciliation
($ in millions) Period Ended December 31, 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Operating income: $80.9 $108.1 $153.5 $232.2 $266.1 $283.5 $115.3 $200.2 $305.7 $376.8 $413.7 $367.1 $324.6 $283.6 $376.9 $375.5 $370.9 $282.1 $461.7 Special items
Slide 25: Adjusted Net Income and ROIC Reconciliation
1 Return on Invested Capital is defined as rolling 12 months of Adjusted Net Income excluding tax-effected interest income and expense divided by Invested Capital. 2 Invested Capital is defined as Total Debt plus Total Equity. 3 EPS and Adjusted EPS have been adjusted to reflect stock splits. ($ in
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