Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Q3 2023 Earnings Presentation
18 slides from Lincoln Electric's earnings presentation, Oct 27, 2023
Slide 1: Lincoln Electric Holdings Q3 2023 Earnings
October 27, 2023 LINCOLN ELECTRIC HOLDINGS, INC. Q3 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: Third Quarter 2023 Highlights
Third Quarter $1.03B 23.6% 2023 Highlights: Record Q3 sales Adjusted ROIC performance +10.5% vs. prior year and +0.4% organic sales Maintaining record performance: Sales Adjusted Operating Margin 17.7% $223M Record Q3 Adjusted Operating Record Q3 Cash flow from operations Adjusted EPS Income Margin
Slide 4: Q3 organic sales growth reflects fewer shipping days
Q3 organic sales growth reflects fewer shipping days (approximate 230 bps impact) Reported Q3 Organic sales +0.4% Q3 global end sector performance1 Equipment up mid-single digit percent 3 of 5 end markets achieved organic sales growth, led by Energy Automation (organic) relatively steady on project
Slide 5: Income Statement – Q3 2023
Income Statement – Q3 2023 YoY % Change $ in Millions Q3 2023 % of Sales Q3 2022 % of Sales Fav/ (Unfav) Net Sales $ 1,033.2 $ 935.2 10.5% Gross Profit 365.6 35.4% 309.5 33.1% 18.1% SG&A 187.1 18.1% 159.0 17.0% (17.6)% Operating Income 171.4 16.6% 142.1 15.2% 20.6% Special item charges1,2 11.9 1.2%
Slide 6: Americas Welding Segment
Americas Welding Segment % YoY ($ in Millions) Q3 2023 Q3 2022 Sales increase primarily from Change acquisitions. Organic sales Net Sales $ 665.2 $ 585.6 13.6% unfavorably impacted approximately (280) bps by fewer shipping days. Adjusted EBIT $ 136.5 $ 118.8 14.9% Consumable and Equipment Adjusted E
Slide 7: International Welding Segment
International Welding Segment % YoY ($ in Millions) Q3 2023 Q3 2022 Change Volumes higher across EMEA and Asia Pacific from strong Net Sales $ 242.0 $ 216.5 11.8% project activity in Turkey, Middle East and portions of Adjusted EBIT $ 30.2 $ 25.2 19.9% Asia Pacific. Adjusted EBIT Margin2 12.2% 11.1%
Slide 8: The Harris Products Group
The Harris Products Group % YoY ($ in Millions) Q3 2023 Q3 2022 Volume performance primarily Change reflects a challenging prior Net Sales $ 126.0 $ 133.1 (5.4)% year comparison in HVAC and moderating demand across most end markets. Adjusted EBIT $ 20.4 $ 14.4 41.4% Price reflects actions taken to A
Slide 9: Cash Flow From Operations Metrics
Cash Flow From Operations Metrics Cash Flow from Operations Average Operating Working ($ in Millions) Capital to Net Sales Ratio +101% $546 20.9% 141% cash conversion1 19.5% Q3-2023; 118% First 18.3% Nine Months 2023 Achieving greater +71% $272 working capital $223 efficiency as operating conditions
Slide 10: Capital Allocation
Capital Allocation1 ($ in Millions) $342 Q3 Capital Allocation & Returns $328 • Growth: $26 million 131 156 • Return to Shareholders: $82 million • Dividend Rate: +14.3% • Return on Invested Capital: 23.6% 111 $108 98 Capital Allocation $78 45 33 27 22 Prioritized uses of cash: 37 33 67 52 • Growth
Slide 11: Full Year 2023 Assumption Trending
Full Year 2023 Assumption Trending Increasing incremental margin and cash conversion and adjusting organic sales assumptions Assumptions Risks Low-double digit % sales growth Economic and geopolitical (Mid-single digit % organic sales) headwinds Neutral price/cost Supply and labor availability High-
Slide 12: Contact
Contact: Amanda Butler Vice President, Investor Relations & Communications Amanda_Butler@lincolnelectric.com 216.383.2534 12 12
Slide 13: Non-GAAP Information
Non-GAAP Information Adjusted operating income, Adjusted net income, Adjusted EBIT, 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. Management uses non-GAA
Slide 14: 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) 14 Pleas
Slide 15: Non-GAAP Financial Measures (continued)
Non-GAAP Financial 1) Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate and Measures adjusted diluted EPS are non-GAAP financial measures. Refer to Non-GAAP Information section. (continued) 2) 2023 charges are primarily related to restructuring activities and
Slide 16: 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) Related to lump sum pension payments due to the final settlement
Slide 17: Segment EBIT
Segment EBIT EBIT and Adjusted EBIT Reconciliation – Three Months Ended September 30, 2023 (In thousands) (Unaudited) 17 Please see the following slide for corresponding footnotes
Slide 18: Non-GAAP Financial Measures (continued)
Non-GAAP 1) EBIT is defined as Operating income plus Other income (expense). Financial 2) The primary profit measure used by management to assess segment performance Measures is adjusted EBIT. EBIT for each operating segment is adjusted for special items to derive adjusted EBIT. (continued) 3) Speci
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