Lincoln Electric Holdings, Inc. · NASDAQ:LECO
Lincoln Electric — Q3 2024 Earnings Presentation
20 slides from Lincoln Electric's earnings presentation, Oct 31, 2024
Slide 1: Q3 2024 Earnings
October 31, 2024 LINCOLN ELECTRIC HOLDINGS, INC. Q3 2024 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 2024 Highlights
Third Quarter $984M 21.4% 2024 Highlights: Net Sales performance Adjusted ROIC performance -5% vs. prior year; Organic sales -8% -220 bps vs. prior year Cost management and lower employee-related costs mitigate impact of lower market demand 17.3% $199M Adjusted operating income Adjusted Operating In
Slide 4: Q3 organic sales challenged by lower industrial production activity & reduced capital spending
Q3 organic sales challenged by lower industrial production activity & reduced capital spending Q3 Organic sales declined 7.7% as price is offset by lower volumes Q3 global end sector performance1 All product areas impacted led by All end markets challenged Automation compression Consumables down low
Slide 5: Savings actions to mitigate margin compression and position for next growth cycle
Savings actions to mitigate margin compression and position the Company for improved profitability in the next growth cycle Targeting $40 to $50 million of annualized savings including $20 to $25 million of permanent cost savings Temporary savings implemented1 (maintaining until conditions improve i
Slide 6: Investing in long-term growth: Innovation
Investing in long-term growth: Innovation Showcased largest number of new products in the last 5-years at the industry’s leading tradeshow • 35+ new solutions across a variety of end-use industries and applications incorporating recently acquired technologies • Key customer benefits include higher p
Slide 7: Income Statement – Q3 2024
Income Statement – Q3 2024 YoY % Change $ in Millions Q3 2024 % of Sales Q3 2023 % of Sales Fav/ (Unfav) Net Sales $ 983.8 $ 1,033.2 (4.8)% Gross Profit 352.1 35.8% 365.6 35.4% (3.7)% SG&A 186.3 18.9% 187.1 18.1% 0.4% Operating Income 145.6 14.8% 171.4 16.6% (15.1)% Special item charges1,2 24.2 2.5%
Slide 8: Americas Welding Segment
Americas Welding Segment % YoY ($ in Millions) Q3 2024 Q3 2023 Change Volumes reflect slowing industrial activity and Net Sales $ 637.0 $ 665.2 (4.2)% automation demand. Adjusted EBIT $ 125.5 $ 136.5 (8.0)% Acquisition contribution from Vanair and RedViking. Adjusted EBIT Margin2 18.8% 19.7% (90) bp
Slide 9: International Welding Segment
International Welding Segment % YoY ($ in Millions) Q3 2024 Q3 2023 Change Volumes challenged by Net Sales $ 216.2 $ 242.0 (10.7)% broad European weakness, with relatively steady demand in Asia Adjusted EBIT $ 20.1 $ 30.2 (33.5)% Pacific. Margin reflects impact of Adjusted EBIT Margin2 9.0% 12.2% (3
Slide 10: The Harris Products Group
The Harris Products Group % YoY Volume performance ($ in Millions) Q3 2024 Q3 2023 Change reflects relatively steady HVAC demand offset by Net Sales $ 130.5 $ 126.0 3.6% weakness in industrial and retail. Adjusted EBIT $ 22.0 $ 20.4 7.6% Price primarily reflects Adjusted EBIT Margin2 16.4% 15.9% +50
Slide 11: Cash Flow From Operations Metrics
Cash Flow From Operations Metrics Cash Flow from Operations Average Operating Working ($ in Millions) Capital to Net Sales Ratio 134% cash conversion1 in Q3-2024 and 109% First Nine Months-2024 $546 $503 19.1% 18.3% 17.1% Working capital performance unfavorably impacted $223 $199 by acquisitions and
Slide 12: Capital Allocation
Capital Allocation1 ($ in Millions) $671 Q3 Capital Allocation & Returns 211 • Growth: $136 million (+424% YoY) • Return to Shareholders: $91 million (+10 YoY) 122 $341 • Return on Invested Capital2: 21.4% 131 $226 50 253 Capital Allocation Strategy 40 111 $108 45 100 33 Prioritized uses of cash: 37
Slide 13: Full Year 2024 Assumptions
Full Year 2024 Assumptions Reflects September’s commentary on decelerating organic sales, but updated with a higher margin assumption from expanded savings actions Assumptions Risks Mid-to-high single digit % organic sales Heavy industries sector softening decline Timing of automotive capital spend
Slide 14: Contact
Contact: Amanda Butler Vice President, Investor Relations & Communications Amanda_Butler@lincolnelectric.com 216.383.2534 14 14
Slide 15: Non-GAAP Information
Non-GAAP Information Adjusted operating income, Adjusted net income, Adjusted EBIT, EBITDA, Adjusted 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. Manage
Slide 16: 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) 16 Pleas
Slide 17: 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) Items in 2024 primarily relate to rationalization plans initiated
Slide 18: 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) Includes the net tax impact of Special items recorded during the
Slide 19: Segment EBIT
Segment EBIT EBIT and Adjusted EBIT Reconciliation – Three Months Ended September 30, 2024 (In thousands) (Unaudited) 19 Please see the following slide for corresponding footnotes
Slide 20: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures 1) EBIT is defined as Operating income plus Other (expense) income. (continued) 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 derive adjusted EBIT. Footnote
Lincoln Electric Holdings — Q3 2024 Earnings Presentation on 6ix