Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Investor Presentation (May 2024)
27 slides from Lincoln Electric's investor presentation, May 23, 2024
Slide 1: Lincoln Electric Holdings, Inc. Overview, May 23, 2024 Update
LINCOLN ELECTRIC HOLDINGS, INC. Over view MAY 23, 2024 UPDATE 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: Lowering Full Year 2024 Assumptions
Lowering Full Year 2024 Assumptions Q2 demand trends slowing at a mid single-digit percent decline vs. prior year on weakening industrial activity and capital investment Risks Economic and geopolitical headwinds Inflation (raw materials & labor) Opportunities (not in assumptions) Velion™ DC Fast Cha
Slide 4: 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 5: 125+ Years of Market-Leading Solutions
125+ Years of Market-Leading Solutions Broadest Portfolio of Solutions in the Industry1 FILLER METALS ARC WELDING EQUIPMENT ACCESSORIES (PPE, FUME, GUNS, TOOLS) CUTTING SOLUTIONS DIGITAL SOLUTIONS AUTOMATION INTEGRATION SERVICES AUTOMATED JOINING & CUTTING ANCILLARY AUTOMATED FUNCTION & CELL COMPONE
Slide 6: Diversified Products and Reach
Diversified Products and Reach 1 Reflects mix of FY2023 Net sales of $4.2 billion Americas Welding includes North and South American welding and cutting solutions and 80% of automation. International Welding includes EMEA and Asia Pacific welding and cutting solutions with EMEA representing approxim
Slide 7: 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 Approximately 4% of revenue serves EV applications and 5% in clean & renewable energy applications4 $23B to $25B Global Arc Welding Market and Share Estimates1 Lincoln Electric Revenue
Slide 8: Accelerating Growth Through the Cycle
Accelerating Growth Through the 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 ESG initiativ
Slide 9: Higher Standard 2025 Strategy and High-Performance Culture Generates Superior Value
Higher Standard 2025 Strategy and High-Performance Culture Generates Superior Value Standardizing tools & processes EH&S commitment Training & development ~57% 2023 equipment sales from new products Automation leader Broadest product portfolio & expertise Growth initiatives Key growth driver Proven
Slide 10: Performance Across Cycles and Higher Standard 2025 Strategy
2003-2008 Commodity Super-Cycle 2009-2013 Post Great Recession 2015-2019 Mini Industrial Recessions 2020-2025 Higher Standard 2025 Strategy Market share strategy BRIC-focused Balance sheet positioned for large acquisitions ROIC and margin-focused strategy Pruned $110M to richen mix Invested in autom
Slide 11: 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 12: Attractive Trends Drive Growth
Attractive Trends Drive Growth Industrial Sector Tailwinds Labor Shortage & Inflation Automation offering services customer growth and reshoring Education solutions train new and upskill professional welders Easy-to-use “Ready.Set.Weld” technology and cobots help welders achieve higher productivity
Slide 13: Adoption of Automation Accelerates Growth
Adoption of Automation Accelerates Growth Leading automation offering places LECO at the forefront of industry transformation 2025 Target: $1B sales & mid-teens percent operating income margin Automation Overview Large-scale 3D Printing Overview Automated Assembly & Material Handling Overview An aut
Slide 14: Leading Innovation and End Sector Expertise Drives Growth
Leading Innovation and End Sector Expertise Drives Growth Extensive R&D, 500+ technical sales & industry application experts & 2,000+ automation team ~42% 2023 total sales from new products ~57% 2023 equipment sales from new products IP Leader Leading global welding industry solutions provider and p
Slide 15: Solutions Engineered to Deliver Measurable Value
Solutions Engineered to Deliver Measurable Value
Slide 16: Supporting Clean Tech Applications
Supporting Clean Tech Applications Product Stewardship Visit https://sustainability.lincolnelectric.com to view our sustainability report and additional information Innovation includes designing greater energy efficiency into our products to reduce their carbon footprint and help customers achieve t
Slide 17: Disciplined Acquisition Program Creates Value
Disciplined Acquisition Program Creates Value Acquisitions are a core growth driver of our Higher Standard 2025 Strategy Mid-Teens $1.1B Cumulative M&A Investment 2014 - 2023 18 $60B 3.4% Dedicated Acquisitions and integrations executed 2014 - 2023 Targeted addressable market (TAM) size for acquisit
Slide 18: Operational Initiatives Advance Margin Improvement
Operational Initiatives Advance 200 bps Margin Improvement (vs. prior cycle average) Safety-focused operating plan emphasizes reduction in emissions, energy intensity, waste and water use Lean initiatives and broad six-sigma training advances continuous improvement and productivity Standardizing too
Slide 19: Protecting the Environment at Every Step
Protecting the Environment at Every Step Water Use 2025 Goal: 14% Reduction vs. 2018 25% Reduction (2023 vs. 2018) Energy Intensity 2025 Goal: 16.2% Reduction vs. 2018 10% Reduction (2023 vs. 2018) GHG Emissions 2025 Goal: 10% Reduction vs. 2018 16% Reduction (2023 vs. 2018) Landfill Avoidance 2025
Slide 20: Strong Cash Generation and Top Quartile ROIC
Strong Cash Generation and Top Quartile ROIC Cash Flow From Operations ($M) & Cash Conversion (%) Return on Invested Capital (Adj. ROIC) 83% Average Cash Conversion2 Target >100% Cash Conversion 23.6% Average Adjusted ROIC 1 Lower cash conversion ratios in 2021 and 2022 reflect strategically elevate
Slide 21: 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 22: Strong Social and Governance Track Record
Strong Social and Governance Track Record 1Composition of 2024 Director nominees Learn more about our governance and social programs at https://sustainability.lincolnelectric.com ESG Governance Board oversight and extensive ESG governance structure ESG strategy aligns to our Higher Standard 2025 Str
Slide 23: Proven Strategy and High-Performance Culture Generates Superior Value
Proven Strategy and High-Performance Culture Generates Superior Value Standardizing tools & processes EH&S commitment Training & development ~57% 2023 equipment sales from new products Automation leader Broadest product portfolio & expertise Growth initiatives Key growth driver Proven integration pr
Slide 24: Contact: Amanda Butler, Investor Relations
Contact: Amanda Butler Vice President, Investor Relations & Communications Amanda_Butler@lincolnelectric.com 216.383.2534
Slide 25: 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 26: 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 2022 2023 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 $61
Slide 27: Net income and ROIC reconciliation
1 Return on Invested Capital is defined as rolling 12 months of Adjusted Net Income excluding tax-effected interest income and expense divided by Invested Capital. 2 Invested Capital is defined as Total Debt plus Total Equity. 3 EPS and Adjusted EPS have been adjusted to reflect stock splits. ($ in
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