Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Stifel 2015 Industrials Conference
29 slides from Lincoln Electric's conference presentation, Jun 16, 2015
Slide 1: Stifel 2015 Industrials Conference
The Welding Experts ® Vincent K. Petrella Executive Vice President & Chief Financial Officer Stifel 2015 Industrials Conference June 16, 2015 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: Pioneer With Market-Leading Technology
Pioneer With Market-Leading Technology EQUIPMENT EQUIPMENT AUTOMATION AUTOMATION FUME CONTROL FUME CONTROL CUTTING CUTTING ACCESSORIES ACCESSORIES CONSUMABLE CONSUMABLE (filler metals) A global manufacturer and market leader with 120 years of expertise. Distinguished by an unwavering commitment to c
Slide 4: Investment Highlights
Investment Highlights 13% CAGR 2006 - 2015 15+% Operating Margin 1 #1 Global Provider of Solutions >$485 Million in 2015 Est. (+28% vs. ‘14) 19+% ROIC Predictable model enables high dividend payout Track record of expanding margins Leader in complete solutions and application expertise Increasing ca
Slide 5: Diversified Products and Reach
Diversified Products and Reach Consumables (filler metals) 62% North America 60% 15% 11% 9% Net Sales by Product Area ¹ Net Sales by Segment ¹ FY2014 Equipment 38% South America Asia Pacific Harris Products Group Europe 5%
Slide 6: Leading Provider Across Diverse End Markets
Leading Provider Across Diverse End Markets 3% LECO Colfax ITW Others General Industrial Fabrication 31% Power Generation & Process 14% Global Arc Welding, Brazing & Cutting Industry Market Share Estimates ¹ Amounts based on the Company estimates of the total market and include sales of equity affil
Slide 7: Innovation & Expertise Differentiate Our Value-Added Model
Innovation & Expertise Differentiate Our Value-Added Model 1920s Motor generator- based equipment Stick electrodes 1950 - 1970s Transformer-based equipment Wire & stick-based consumables 1990 - Inverter-based equipment (digital) Proprietary wave form technologies Broader-range of consumables & alloy
Slide 8: Innovation Drives Growth
Innovation Drives Growth 61 Adding MIG to existing TIG solution Used in various oil and gas applications Leverages a standard, installed base of Power Wave ® equipment, unique motion control technology & new, simple interface New digital system is 75% faster; meeting the need for speed and ease-of-u
Slide 9: Disciplined M&A is Expanding Growth Opportunities
Disciplined M&A is Expanding Growth Opportunities $489 Million Cumulative M&A Investment 2005-2014 Sales growth attributed to acquisitions (%) Expanding the market size potential for future growth ¹ $23 Billion $35 Billion Arc Welding, Brazing & Cutting + Automation + Hardfacing Based on company est
Slide 10: '2020 Strategy' Targets Best-in-Class Financial Performance
‘2020 Strategy’ Targets Best-in-Class Financial Performance FY2014 Result 2009 to 2014 Performance 2020 Goal (2009-2020) 2020 Sales Growth -1.4% 10.2% CAGR 10% CAGR Adj Op Profit Margin 15.1% Average 11.7% Average 15.0% ROIC 19.1% Average 14.8% Average 15.0% Operating Working Capital Ratio 16.5% 670
Slide 11: Economic Variables Impacting Our Industry
Economic Variables Impacting Our Industry 4% 4% 2% 5% 5% 7% China 50% 10% ROW 11% Share of World Crude Steel Production: World Steel Association. Note: U.S. steel production FY2014: +1.7%, YTD through April 2015: -8.5% Markit Financial Information Services EU-28 Crude Steel Production Annual Growth
Slide 12: Components of Revenue Performance
4.2% 15.5% 6.8% -3.9% -29.8% 14.1% 14.8% 1.3% -2.7% -2.0% -0.8% 8.0% 2.9% 3.7% 7.8% -0.5% 0.4% 6.9% 1.7% 0.1% 1.8% 2.9% 7.0% 3.4% 2.0% 3.0% 3.0% 5.3% 5.8% 4.9% 0.9% 1.3% 3.2% 1.9% -2.9% 2.6% -2.0% -4.0% Solid Price Performance. Volumes Impacted by Initiatives to Improve Mix and Macro’s 20.1% 23.1% 1
Slide 13: Q2 Trending: Focused on 2020 Vision & Strategy initiatives
Q2 Trending: Focused on ‘2020 Vision & Strategy’ initiatives to drive long-term margin and earnings growth Value Drivers in Q2: • Richening mix • Automation growth • Diversified end sector exposure with steady-to-modest growth in: • General Fabrication • Automotive • Shipbuilding • Pipe mills • Stru
Slide 14: Q2 Trending: Near-term trends and challenging comparisons
Q2 Trending: Near - term trends and challenging YoY comparisons keep us cautious on earnings performance Q2 Challenges: • FX translation – mid single-digit percent decline QTD thru May • Weakening oil/gas – high teens percent decline QTD thru May • Weakening exports – over 25 percent decline QTD thr
Slide 15: Focused on Higher Margin Opportunities
Focused on Higher Margin Opportunities Excludes special items. Please refer to the appendix for reconciliation of non-GAAP measures. Operating Profit Margin vs. Net Sales
Slide 16: Cash Generation Remains a Top Priority
Cash Generation Remains a Top Priority Ginmitins) Cash Flow Working Capital as from Operations Percent of Sales Ratio i $402 Y g90bps 25.8% f 820 bps 24.7% 24.8% reduction $339 a 22.5% $328 21.0% 21.6% 18.8% $388 6% 18.3% $250 $257 go5q yy $65 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Q1-15 2
Slide 17: Solid Cash Flows are Funding Growth and Accelerated Shareholder Returns
Solid Cash Flows are Funding Growth and Accelerated Shareholder Returns $477 >$550 $43 $45 $47 $52 $73 $49 1 $73 $85-$90 $42 $40 $37 $81 $168 $307 $400 $72 $38 $61 $66 $53 $76 $73 $65-$75 $346 $342 $221 $167 $108 $201 ($ in millions) Q1/2013 dividend paid in Q4/2012 Capital Allocation $44 $25 $19 $6
Slide 18: Predictable Model Enables a Growing Dividend Payout
Predictable Model Enables a Growing Dividend Payout 13.2% CAGR 2006 - Dividend History Celebrating 100 years of dividend payments $0.38 $0.44 $0.50 $0.54 $0.56 $0.62 $0.68 $0.80 $0.92 $1.16
Slide 19: Disciplined Capital Deployment Delivers Top Quartile Returns
Disciplined Capital Deployment Delivers Top Quartile Returns Return on Invested Capital 17.7% 19.9% 16.8% 18.8% 4.3% 10.7% 16.9% 18.7% 18.9% 19.1% 20.1% Q1-2015
Slide 20: Summary – Positioned for Long Term Value Creation
Summary – Positioned for Long Term Value Creation #1 Global Provider Top Quartile ROIC $840M Returned to Shareholders 2011-2014 Driving Growth and Richening Mix Top Market Position in Arc Welding • Differentiated by comprehensive equipment and consumables • Renowned Welding Experts ® with industry-l
Slide 21: Appendix
Appendix Amanda Butler Director, Investor Relations Amanda_Butler@lincolnelectric.com 216.383.2534
Slide 22: Net Income
Net Income Solid earnings performance through the cycle ($ in Millions) 2005-2014 CAGR 10.5% Net Income Excludes special items. Please refer to the appendix for reconciliation of non-GAAP measures. $125 $171 $203 $231 $73 $130 $231 $266 $313 $306 Q1 2015
Slide 23: Diluted Earnings Per Share Progression
Diluted Earnings Per Share Progression Beginning of Upturn Beginning of Recession Please refer to the appendix for reconciliation of non-GAAP measures. (EXCLUDING SPECIAL ITEMS)
Slide 24: Operating Income Non-GAAP Reconciliation
Operating income: $149,845 $232,970 $277,632 $295,404 $92,976 $186,430 $296,680 $362,081 $406,985 $373,747 $90,499 Adjusted operating income: $ 153,548 $ 227,442 $ 277,444 $ 314,775 $ 121,330 $ 189,169 $ 296,962 $ 372,816 $ 428,351 $424.933 $90,499 Adjusted op income % 9.6% 11.5% 12.2% 12.7% 7.0% 9.
Slide 25: Net Income Non-GAAP Reconciliation
Net income: $122,306 $175,008 $202,736 $212,286 $48,576 $130,244 $217,186 $257,411 $293,780 $254,686 $68,354 Adjusted Net Income: $ 112,747 $ 171,282 $ 202,629 $ 230,599 $ 121,330 $ 129,600 $ 212,579 $ 265,759 $ 313,188 $ 305,928 $ 68,354 Non-GAAP Financial Measures Period Ended December 31, Q1-2015
Slide 26: Slide 26
Slide 27: Reconciliation of Diluted EPS to Adjusted EPS
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 Diluted EPS: $0.62 $0.81 $0.80 $0.23 $(0.04) $0.18 $0.15 $0.29 $0.28 $0.38 $0.38 $0.49 Adjusted Diluted EPS: $0.62 $0.81 $0.80 $0.44 $0.05 $0.17 $0.32 $0.32 $0.28 $0.39 $0.39 $0.45 Non-GAAP Financial Meas
Slide 28: Lincoln Electric
LINCOLN
Slide 29: Reconciliation of Diluted EPS to Adjusted EPS
2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2014 2014 2014 2015 2009 2009 2009 2010 2010 2010 2010 Diluted EPS: $0.69 $0.96 $0.57 $0.96 $0.89 $0.18 $0.15 $0.29 $0.28 $0.38 $0.38 $0.49 0.08 0.07 0.03 0.01 (0.04) - 0.02 - - - - 0.03 0.01 - Adjusted Diluted EPS: $0.91 $1.01 $0.94 $0.96 $0.89 $0.17 $0
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