Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Stifel 2023 Cross Sector Insight Conference
26 slides from Lincoln Electric's conference presentation, Jun 7, 2023
Slide 1: Lincoln Electric Holdings, Inc. Overview
LINCOLN ELECTRIC HOLDINGS, INC. Overview
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: High-Performance Industry Leader Targeting Superior Value Through the Cycle
High-Performance Industry Leader Targeting Superior Value Through the Cycle #1 Leader Innovation & Predictable Disciplined Earnings Strong Cash in Growing Operational Model With Capital Compounder Generation Arc Welding Excellence Annual Deployment Through the Through the & Cutting Advances Dividend
Slide 4: 125+ Years of Market-Leading Solutions
125+ Years of Market-Leading Solutions Our Guiding Principle: Broadest Portfolio of Solutions in the Industry1 The Golden Rule EDUCATION PRODUCTS, Founded 1895 CURRICULUMS & SCHOOL AUTOMATION INTEGRATION ARC WELDING SERVICES EQUIPMENT Renowned business model with high-performance culture DIGITAL SOL
Slide 5: Diversified Products and Reach
Diversified Products and Reach Net Sales by Product Area1 Net Sales by Segment1 Americas Welding includes North and South American welding and cutting solutions, including approximately 75% of automation solutions. Harris Products Group 42% 14% International Welding includes Europe and Asia Consumab
Slide 6: Leading Provider Across Diverse End Markets
Leading Provider Across Diverse End Markets $23B to $25B Global Arc Welding Market Lincoln Electric Revenue Mix by and Share Estimates1 End Market Sector2 LSD% average 14% organic Construction & growth Infrastructure Others 32% General Global 19% Fabrication Automotive & Competitors Transportation 1
Slide 7: Higher Standard 2025 Strategy and High-Performance Culture Generates Superior Value
Higher Standard 2025 Strategy and High-Performance Culture Generates Superior Value Drives compounded earnings growth across cycles + + Balanced Capital Allocation & Strong 2020-2025 Targets Cash Generation v Disciplined M&A High Single-Digit to Low Double-Digit % v Solutions & Value 100+% cash conv
Slide 8: Accelerating Growth in a Favorable Industrial Cycle
Accelerating Growth in a Higher Standard 2025 Favorable Industrial Cycle Strategy Financial Targets (2020 Baseline) Sales CAGR: High Single-Digit to Low Double-Digit % Avg. Adj. Op Income Margin: 16% (+/- 150 bps) Segment Adj. EBIT Margin Ranges: Accelerate growth: innovation, automation, additive,
Slide 9: Robust Topline Growth
Robust Topline Growth More than 2x growth expected vs. underlying market +300-400 bps High +200-300 bps Single-Digit % to Low Double- +100-200 bps Digit % Sales CAGR (2020-2025) New Industrial Automation / Anticipated Initiatives / Production Additive M&A Innovation 9 * graph is not to scale.
Slide 10: Attractive Trends Drive Growth
Attractive Trends Drive Growth Industrial Sector Tailwinds Labor Renewable & Infrastructure Safer and Energy-Efficient Shortage Investment Solutions • Automation offering services • Extensive portfolio and expertise for • Product stewardship team engineers customer growth and reshoring renewable, EV
Slide 11: Adoption of Automation Accelerates Growth
Adoption of Automation Accelerates Growth Leading automation offering places LECO at the forefront of industry transformation Automation Overview 2025 Target: $1B sales & mid-teens percent operating income margin An automation leader with $900M sales run rate growing at a HSD% to LDD% organic sales
Slide 12: 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 Vitality Index1 IP Leader Speed-to-Market 41 ~37% ~57% Leading global welding Regional co-development of new Infrastructure of global technology indus
Slide 13: Solutions Engineered to Deliver Measurable Value
Solutions Engineered to Deliver Measurable Value 13
Slide 14: New Growth Initiative: DC Fast Charger for EVs
New Growth Initiative: DC Fast Charger for EVs • Finalizing design and production ahead of our Q4-2023 launch of our new Velion™150kW (level 3) DC fast charger for the U.S. market • Initially targeting public EV charger infrastructure and private fleet managers Why Lincoln Electric? • Proven power e
Slide 15: Disciplined Acquisition Program Creates Value
Disciplined Acquisition Program Creates Value 3.0% $1.1B Acquisitions are a core growth driver CAGR from M&A sales growth Cumulative M&A Investment 2012 - 2022 2013 - 2022 of our Higher Standard 2025 Strategy 20 Mid-Teens % Acquisitions and integrations Average ROIC performance executed 2013 - 2022
Slide 16: Operational Initiatives Advance 200 bps Margin Improvement
Operational Initiatives Advance 200 bps Margin • Safety-focused operating plan emphasizes reduction in emissions, energy intensity, waste and water use Improvement (vs. prior cycle average) • Lean initiatives and broad six-sigma training advances continuous improvement and productivity • Lincoln Bus
Slide 17: Strong Cash Generation and Top Quartile ROIC
Strong Cash Generation and Top Quartile ROIC Cash Flow From Operations ($M) Return on Invested Capital (Adj. ROIC) & Cash Conversion (%) $400 64% 23.9% 81% 22.7%2 117% $350 $300 17.7% $250 $200 $383 $351 $365 $150 $100 $50 $0 2020 2021 2022 2020 2021 2022 Cash Flow From Operations 87% Average Cash C
Slide 18: Growth and Return Focused Capital Allocation Strategy
Growth and Return Focused Capital Allocation Strategy DISCIPLINED CONSECUTIVE 26-YEAR OPPORTUNISTIC INVESTMENT GRADE PROFILE ACQUISITIONS DIVIDEND INCREASE SHARE REPURCHASES BALANCE SHEET 2004-2008 2009-2013 2015-2019 2020-2025 Commodity Post Great Mini Industrial Higher Standard Super-Cycle Recessi
Slide 19: Protecting the Environment at Every Step
Protecting the Environment at Every Step Product Stewardship Innovation includes designing greater energy efficiency into our products to Safety Water Use address climate change and help 2025 Goal: 52% Reduction vs. 2018 2025 Goal: 14% Reduction vs. 2018 customers achieve their ESG goals. 16% Reduct
Slide 20: Strong Social and Governance Track Record
Strong Social and Governance Track Record ESG Governance • Board oversight and expanded ESG governance in 2022 • ESG strategy aligns to our Higher Standard 2025 Strategy Committed to Employee Development • Extensive global training and development programs • Support employee resource group programmi
Slide 21: Proven Strategy and High-Performance Culture Generates Superior Value
Proven Strategy and High-Performance Culture Generates Superior Value Drives compounded earnings growth across cycles + + Balanced Capital Allocation & Strong 2020-2025 Targets Cash Generation v Disciplined M&A High Single-Digit to Low Double-Digit % v Solutions & Value 100+% cash conversion Sales G
Slide 22: Contact
Contact: Amanda Butler Vice President, Investor Relations & Communications Amanda_Butler@lincolnelectric.com 216.383.2534 22 22
Slide 23: 2025 Strategy Advances Performance vs. Prior Cycles
2025 Strategy Advances Performance vs. Prior Cycles 2X- High Single-Digit to Sales CAGR 19% 13%1 4%1 3X Low Double-Digit % CAGR Average Adjusted 200+ 16% Operating Margin 10.3% 11.7% 13.7% bps (+/- 150 bps) Adjusted EPS CAGR 32% 45% 8% 2X High Teens to Low 20% Average Adjusted 18.9% 18% to 20% ROIC
Slide 24: 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 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Operating Income and Operating Income Margin to Non-GAAP Adjusted Operating Income and Adjusted Operating Income Margin ($ in millions) Period Ended December 31, 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Return on Invested Capital1 & Reconciliation of Diluted EPS to Non-GAAP Diluted Adjusted EPS ($ 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 Net income: $54.5 $80.6 $122.3 $175.0
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