Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Q2 2023 Earnings Presentation
18 slides from Lincoln Electric's earnings presentation, Jul 27, 2023
Slide 1: Q2 2023 Earnings
July 27, 2023 LINCOLN ELECTRIC HOLDINGS, INC. Q2 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: Second Quarter 2023 Highlights
Second Quarter $1.06B 22.9% 2023 Highlights: Record Q2 sales Adjusted ROIC performance +9% vs. prior year; Organic sales +4.5% Solid momentum in Q2 Record Sales, Adjusted Operating Margin, 17.4% $199M Record Q2 Adjusted Operating Record Q2 Cash flow from operations Adjusted EPS and Cash Income Margi
Slide 4: Q2 Organic Growth Driven by Volumes as Price Anniversaries; Strong Backlog and Solid Order Rates
Q2 Organic Growth Driven by Volumes as Price Anniversaries; Strong Backlog and Solid Order Rates Q2 Organic sales increased 4.5% led by the Welding Segments Q2 global end sector performance1 Organic growth in all product areas 2 of 5 end markets achieved driven by volumes and led by organic sales gr
Slide 5: Income Statement – Q2 2023
Income Statement – Q2 2023 YoY % Change $ in Millions Q2 2023 % of Sales Q2 2022 % of Sales Fav/ (Unfav) Net Sales $ 1,060.6 $ 969.6 9.4% Gross Profit 373.4 35.2% 333.5 34.4% 12.0% SG&A 192.7 18.2% 166.8 17.2% (15.6)% Operating Income 178.0 16.8% 167.5 17.3% 6.3% Special item charges1,2 6.2 0.6% 0.6
Slide 6: Americas Welding Segment
Americas Welding Segment % YoY ($ in Millions) Q2 2023 Q2 2022 Change Volumes higher across all 3 product groups, with strong Net Sales $ 677.0 $ 595.7 13.6% U.S. exports, equipment and automation demand. Adjusted EBIT $ 139.9 $ 118.1 18.5% Price reflects new, targeted Adjusted EBIT Margin2 19.8% 18
Slide 7: International Welding Segment
International Welding Segment % YoY ($ in Millions) Q2 2023 Q2 2022 Volume growth led by Change Asia Pacific. Net Sales $ 253.4 $ 236.6 7.1% Price reflects new, targeted actions as prior Adjusted EBIT $ 33.8 $ 35.0 (3.5)% pricing actions have anniversaried. Adjusted EBIT Margin2 12.9% 14.2% (130) bp
Slide 8: The Harris Products Group
The Harris Products Group % YoY ($ in Millions) Q2 2023 Q2 2022 Volumes reflect Change continued weakness in Net Sales $ 130.2 $ 137.3 (5.2)% retail and moderating residential and industrial demand. Adjusted EBIT $ 19.5 $ 17.9 8.9% Price reflects actions Adjusted EBIT Margin2 14.7% 12.8% +190 bps ta
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 $323 20.9% 125% cash conversion1 19.0% 18.9% Q2-2023; 106% H1-2023 $199 Working capital remains strategically elevated to $141 mitigate supply constraints. $98 Q2-22 Q2-23
Slide 10: Capital Allocation
Capital Allocation1 ($ in Millions) $253 Q2 Capital Allocation & Returns $233 • Growth: $54 million 130 85 • Return to Shareholders: $90 million • Dividend Rate: +14.3% $145 • Return on Invested Capital: 22.9% 53 74 Capital Allocation Outlook $74 66 37 25 33 Prioritized uses of cash: 22 33 33 • Grow
Slide 11: Maintaining Full Year 2023 Assumptions
Maintaining Full Year 2023 Assumptions Assumptions Risks Low-to-mid teens % sales growth Economic and geopolitical (Mid-to-high single digit % organic sales) headwinds Neutral price/cost Supply and labor availability Mid-to-high teens % incremental operating Inflation (raw materials & labor) income
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 adjusted diluted EPS are non-GAAP financial measures. Refer to Non- Measures GAAP Information section. (continued) 2) 2023 charges are primarily related to restructuring activities an
Slide 16: Non-GAAP Financial Measures: Adjusted 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 acquisitions and are included in Selling, general & a
Slide 17: Segment EBIT
Segment EBIT EBIT and Adjusted EBIT Reconciliation – Three Months Ended June 30, 2023 (In thousands) (Unaudited) 17 Please see the following slide for corresponding footnotes
Slide 18: Non-GAAP Financial Measures (continued)
Non-GAAP Financial 1) EBIT is defined as Operating income plus Other income (expense). Measures 2) The primary profit measure used by management to assess segment performance is adjusted EBIT. EBIT for each operating segment is adjusted for special items to (continued) derive adjusted EBIT. 3) Speci
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