Lincoln Electric Reports Third Quarter 2024 Results

About this update from Lincoln Electric Holdings, Inc.

Third Quarter 2024 Highlights Net sales of $984 million Operating income margin of 14.8%; Adjusted operating income margin of 17.3% EPS of $1.77 ; Adjusted EPS of $2.14 Cash flows from operations of $199 million and 134% cash conversion Returned $91 million to shareholders through dividends and share repurchases CLEVELAND --(BUSINESS WIRE)-- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2024 net income of $100.8 million , or diluted earnings per share (EPS) of $1.77 , which includes special item after-tax net charges of $21.6 million , or $0.37 EPS. This compares with prior year period net income of $129.3 million , or $2.22 EPS, which included special item after-tax net charges of $10.1 million , or $0.18 EPS. Excluding special items, third quarter 2024 adjusted net income was $122.4 million , or $2.14 adjusted EPS. This compares with adjusted net income of $139.5 million , or $2.40 adjusted EPS, in the prior year period. Third quarter 2024 sales decreased 4.8% to $983.8 million reflecting a 7.7% decrease in organic sales and a 3.0% benefit from acquisitions. Operating income for the third quarter 2024 was $145.6 million , or 14.8% of sales, as compared with operating income of $171.4 million , or 16.6% of sales, in the prior year period. Excluding special items, adjusted operating income was $169.8 million , or 17.3% of sales, as compared with $183.4 million , or 17.7% of sales, in the prior year period. “Third quarter results demonstrated the resilience of our business as benefits from our strategic initiatives, diligent cost management, and lower employee-related costs generated solid profitability and cash flow performance,” stated Steven B. Hedlund , President and Chief Executive Officer. “During the quarter we initiated broader cost saving measures to address slowing organic sales trends, while investing in long-term growth and operational excellence, which will position the Company to outperform through the cycle.” Nine Months 2024 Summary Net income for the nine months ended September 30, 2024 was $325.9 million , or $5.68 EPS, which includes special item after-tax net charges of $59.4 million , or $1.04 EPS. This compares with prior year period net income of $388.6 million , or $6.67 EPS, which included special item after-tax net charges of $17.3 million , or $0.30 EPS. Excluding these items, adjusted net income for the nine months ended September 30, 2024 decreased 5.1% to $385.3 million , or $6.72 EPS, compared with $405.9 million , or $6.97 EPS, in the prior year period. Sales decreased 4.7% to $2,986.6 million in the nine months ended September 30, 2024 reflecting a 6.1% decrease in organic sales and a 1.5% benefit from acquisitions. Operating income for the nine months ended September 30, 2024 was $459.4 million , or 15.4% of sales. This compares with operating income of $513.8 million , or 16.4% of sales, in the comparable 2023 period. Excluding special items, adjusted operating income was $518.8 million , or 17.4% of sales, as compared with $536.7 million , or 17.1% of sales, in the prior year period. Dividend The Company’s Board of Directors declared a quarterly cash dividend of $0.75 per share, or $3.00 per share on an annualized basis, a 5.6% increase from the prior quarterly cash dividend. The declared quarterly cash dividend of $0.75 per share is payable January 15, 2025 to shareholders of record as of December 31, 2024 . Webcast Information A conference call to discuss third quarter 2024 financial results will be webcast live today, October 31, 2024 , at 10:00 a.m., Eastern Time . Those interested in participating via webcast in listen-only mode can access the event here or on the Company's Investor Relations home page at https://ir.lincolnelectric.com . For participants who would like to participate via telephone, please dial (888) 440-4368 (domestic) or (646) 960-0856 (international) and use confirmation code 6709091. A replay of the earnings call will be available via webcast on the Company's website . About Lincoln Electric Lincoln Electric is the world leader in the engineering, design, and manufacturing of advanced arc welding solutions, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment, and has a leading global position in brazing and soldering alloys. Lincoln is recognized as the Welding Expert™ for its leading materials science, software development, automation engineering, and application expertise, which advance customers’ fabrication capabilities to help them build a better world. Headquartered in Cleveland, Ohio , Lincoln operates 71 manufacturing and automation system integration locations across 21 countries and maintains a worldwide network of distributors and sales offices serving customers in over 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at https://www.lincolnelectric.com . Non-GAAP Information Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate, adjusted diluted earnings per share (“adjusted EPS”), Organic sales, Cash conversion, adjusted net operating profit after taxes and adjusted return on invested capital (“adjusted ROIC”) are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently. Forward-Looking Statements The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic, financial and market conditions; the effectiveness of commercial and operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as the impact of the Russia - Ukraine conflict, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 . Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Consolidated Statements of Income Fav (Unfav) to Three Months Ended September 30 , Prior Year 2024 % of Sales 2023 % of Sales $ % Net sales $ 983,759 100.0 % $ 1,033,214 100.0 % $ (49,455 ) (4.8 ) % Cost of goods sold 631,681 64.2 % 667,584 64.6 % 35,903 5.4 % Gross profit 352,078 35.8 % 365,630 35.4 % (13,552 ) (3.7 ) % Selling, general & administrative expenses 186,291 18.9 % 187,115 18.1 % 824 0.4 % Rationalization and asset impairment charges 20,227 2.1 % 7,074 0.7 % (13,153 ) (185.9 ) % Operating income 145,560 14.8 % 171,441 16.6 % (25,881 ) (15.1 ) % Interest expense, net 11,974 1.2 % 10,809 1.0 % (1,165 ) (10.8 ) % Other (expense) income (1,644 ) (0.2 ) % 801 0.1 % (2,445 ) (305.2 ) % Income before income taxes 131,942 13.4 % 161,433 15.6 % (29,491 ) (18.3 ) % Income taxes 31,186 3.2 % 32,090 3.1 % 904 2.8 % Effective tax rate 23.6 % 19.9 % (3.7 ) % Net income $ 100,756 10.2 % $ 129,343 12.5 % $ (28,587 ) (22.1 ) % Basic earnings per share $ 1.78 $ 2.26 $ (0.48 ) (21.2 ) % Diluted earnings per share $ 1.77 $ 2.22 $ (0.45 ) (20.3 ) % Weighted average shares (basic) 56,565 57,320 Weighted average shares (diluted) 57,066 58,136 Fav (Unfav) to Nine Months Ended September 30 , Prior Year 2024 % of Sales 2023 % of Sales $ % Net sales $ 2,986,639 100.0 % $ 3,133,122 100.0 % $ (146,483 ) (4.7 ) % Cost of goods sold 1,882,349 63.0 % 2,038,707 65.1 % 156,358 7.7 % Gross profit 1,104,290 37.0 % 1,094,415 34.9 % 9,875 0.9 % Selling, general & administrative expenses 593,523 19.9 % 569,979 18.2 % (23,544 ) (4.1 ) % Rationalization and asset impairment charges 51,322 1.7 % 10,618 0.3 % (40,704 ) (383.3 ) % Operating income 459,445 15.4 % 513,818 16.4 % (54,373 ) (10.6 ) % Interest expense, net 31,414 1.1 % 35,708 1.1 % 4,294 12.0 % Other (expense) income (935 ) — % 11,727 0.4 % (12,662 ) (108.0 ) % Income before income taxes 427,096 14.3 % 489,837 15.6 % (62,741 ) (12.8 ) % Income taxes 101,217 3.4 % 101,232 3.2 % 15 0.0 % Effective tax rate 23.7 % 20.7 % (3.0 ) % Net income $ 325,879 10.9 % $ 388,605 12.4 % $ (62,726 ) (16.1 ) % Basic earnings per share $ 5.74 $ 6.76 $ (1.02 ) (15.1 ) % Diluted earnings per share $ 5.68 $ 6.67 $ (0.99 ) (14.8 ) % Weighted average shares (basic) 56,749 57,465 Weighted average shares (diluted) 57,349 58,277 Lincoln Electric Holdings, Inc. Financial Highlights (In thousands) (Unaudited) Balance Sheet Highlights Selected Consolidated Balance Sheet Data September 30, 2024 December 31, 2023 Cash and cash equivalents $ 404,218 $ 393,787 Accounts receivable, net 517,035 538,830 Inventories 612,412 562,864 Total current assets 1,757,101 1,693,111 Property, plant and equipment, net 624,403 575,316 Total assets 3,664,545 3,377,297 Trade accounts payable 323,584 325,435 Total current liabilities 951,336 754,610 Short-term debt (1) 111,993 2,439 Long-term debt, less current portion 1,150,616 1,102,771 Total equity 1,339,190 1,308,852 Operating Working Capital September 30, 2024 December 31, 2023 Average operating working capital to Net sales (2) 19.1 % 17.1 % Invested Capital September 30, 2024 December 31, 2023 Short-term debt (1) $ 111,993 $ 2,439 Long-term debt, less current portion 1,150,616 1,102,771 Total debt 1,262,609 1,105,210 Total equity 1,339,190 1,308,852 Invested capital $ 2,601,799 $ 2,414,062 Total debt / invested capital 48.5 % 45.8 % (1) Includes current portion of long-term debt. (2) Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Non-GAAP Financial Measures Three Months Ended September 30 , Nine Months Ended September 30 , 2024 2023 2024 2023 Operating income as reported $ 145,560 $ 171,441 $ 459,445 $ 513,818 Special items (pre-tax): Rationalization and asset impairment charges (2) 20,227 7,074 51,322 10,618 Acquisition transaction costs (3) 610 — 4,551 — Amortization of step up in value of acquired inventories (5) 3,359 4,852 3,474 12,252 Adjusted operating income (1) $ 169,756 $ 183,367 $ 518,792 $ 536,688 As a percent of net sales 17.3 % 17.7 % 17.4 % 17.1 % Net income as reported $ 100,756 $ 129,343 $ 325,879 $ 388,605 Special items: Rationalization and asset impairment charges (2) 20,227 7,074 51,322 10,618 Acquisition transaction costs (3) 610 — 4,551 — Pension settlement charges (4) 3,966 — 3,966 — Amortization of step up in value of acquired inventories (5) 3,359 4,852 3,474 12,252 Loss (gain) on asset disposal (6) — — 4,950 (1,646 ) Tax effect of Special items (7) (6,550 ) (1,780 ) (8,858 ) (3,908 ) Adjusted net income (1) 122,368 139,489 385,284 405,921 Interest expense, net 11,974 10,809 31,414 35,708 Income taxes as reported 31,186 32,090 101,217 101,232 Tax effect of Special items (7) 6,550 1,780 8,858 3,908 Adjusted EBIT (1) $ 172,078 $ 184,168 $ 526,773 $ 546,769 Effective tax rate as reported 23.6 % 19.9 % 23.7 % 20.7 % Net special item tax impact — % (0.4 ) % (1.5 ) % (0.1 ) % Adjusted effective tax rate (1) 23.6 % 19.5 % 22.2 % 20.6 % Diluted earnings per share as reported $ 1.77 $ 2.22 $ 5.68 $ 6.67 Special items per share 0.37 0.18 1.04 0.30 Adjusted diluted earnings per share (1) $ 2.14 $ 2.40 $ 6.72 $ 6.97 Weighted average shares (diluted) 57,066 58,136 57,349 58,277 (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-GAAP Information section. (2) Items in 2024 primarily relate to rationalization plans initiated during the third quarter of 2024 in all three segments, as well as previously initiated plans and the disposition of the Company’s Russian entity in International Welding. Items in 2023 primarily relate to plans previously initiated within International Welding. (3) Related to acquisitions and are included in Selling, general & administrative expenses. (4) Pension settlement charges primarily due to the final settlement associated with the termination of a pension plan and are included in Other (expense) income. (5) Related to acquisitions and are included in Cost of goods sold. (6) Loss (gain) on asset disposal is included in Other (expense) income. (7) Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Non-GAAP Financial Measures Twelve Months Ended September 30 , Return on Invested Capital 2024 2023 Net income as reported $ 482,523 $ 497,751 Plus: Interest expense (after-tax) 37,665 36,283 Less: Interest income (after-tax) 7,845 3,104 Net operating profit after taxes $ 512,343 $ 530,930 Special Items: Rationalization and asset impairment charges 29,390 13,001 Acquisition transaction costs 4,554 2,935 Pension settlement charges 4,811 — Amortization of step up in value of acquired inventories 3,471 12,253 Loss (gain) on asset disposal 4,950 (1,646 ) Tax effect of Special items (2) (2,413 ) (5,159 ) Adjusted net operating profit after taxes (1) $ 557,106 $ 552,314 Invested Capital September 30, 2024 September 30, 2023 Short-term debt $ 111,993 $ 7,700 Long-term debt, less current portion 1,150,616 1,102,858 Total debt 1,262,609 1,110,558 Total equity 1,339,190 1,225,582 Invested capital $ 2,601,799 $ 2,336,140 Return on invested capital as reported 19.7 % 22.7 % Adjusted return on invested capital (1) 21.4 % 23.6 % (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 respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Condensed Consolidated Statements of Cash Flows Three Months Ended September 30 , 2024 2023 OPERATING ACTIVITIES: Net income $ 100,756 $ 129,343 Adjustments to reconcile Net income to Net cash provided by operating activities: Rationalization and asset impairment net charges 2,168 (6 ) Depreciation and amortization 22,644 21,489 Pension settlement net charges 3,966 — Other non-cash items, net (7,051 ) 41 Changes in operating assets and liabilities, net of effects from acquisitions: Decrease in accounts receivable 50,650 25,585 Decrease in inventories 5,930 51,514 Net change in other current assets (14,758 ) (1,454 ) Decrease in trade accounts payable (35,844 ) (26,238 ) Net change in other current liabilities 72,402 29,226 Net change in other long-term assets and liabilities (1,662 ) (6,396 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 199,201 223,104 INVESTING ACTIVITIES: Capital expenditures (35,722 ) (25,907 ) Acquisition of businesses, net of cash acquired (100,092 ) (28 ) Proceeds from sale of property, plant and equipment 1,203 704 Purchase of marketable securities — 468 NET CASH USED BY INVESTING ACTIVITIES (134,611 ) (24,763 ) FINANCING ACTIVITIES: Proceeds from (payments on) short-term borrowings 6,099 (2,594 ) Proceeds from long-term borrowings 150,000 — Payments on long-term borrowings (169 ) (1,019 ) Proceeds from exercise of stock options 899 1,289 Purchase of shares for treasury (50,392 ) (45,355 ) Cash dividends paid to shareholders (40,283 ) (36,805 ) NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 66,154 (84,484 ) Effect of exchange rate changes on Cash and cash equivalents 802 8,327 INCREASE IN CASH AND CASH EQUIVALENTS 131,546 122,184 Cash and cash equivalents at beginning of period 272,672 220,483 Cash and cash equivalents at end of period $ 404,218 $ 342,667 Cash dividends paid per share $ 0.71 $ 0.64 Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share amounts) (Unaudited) Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30 , 2024 2023 OPERATING ACTIVITIES: Net income $ 325,879 $ 388,605 Adjustments to reconcile Net income to Net cash provided by operating activities: Rationalization and asset impairment net charges 25,919 1,128 Depreciation and amortization 65,095 64,701 Pension settlement net charges 3,966 — Other non-cash items, net 9,484 21,427 Changes in operating assets and liabilities, net of effects from acquisitions: Increase in accounts receivable 36,166 6,695 (Increase) decrease in inventories (21,696 ) 57,781 Net change in other current assets (19,911 ) (14,729 ) Increase in trade accounts payable (6,888 ) (24,672 ) Net change in other current liabilities 67,310 57,975 Net change in other long-term assets and liabilities 17,858 (13,031 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 503,182 545,880 INVESTING ACTIVITIES: Capital expenditures (85,117 ) (66,459 ) Acquisition of businesses, net of cash acquired (252,746 ) (32,685 ) Proceeds from sale of property, plant and equipment 2,506 4,596 Purchase of marketable securities — (6,561 ) NET CASH USED BY INVESTING ACTIVITIES (335,357 ) (101,109 ) FINANCING ACTIVITIES: Proceeds from (payments on) short-term borrowings 5,521 (74,818 ) Proceeds from long-term borrowings 550,000 — Payments on long-term borrowings (400,508 ) (7,997 ) Proceeds from exercise of stock options 25,880 13,299 Purchase of shares for treasury (211,212 ) (130,589 ) Cash dividends paid to shareholders (121,979 ) (111,277 ) NET CASH USED BY FINANCING ACTIVITIES (152,298 ) (311,382 ) Effect of exchange rate changes on Cash and cash equivalents (5,096 ) 12,128 INCREASE IN CASH AND CASH EQUIVALENTS 10,431 145,517 Cash and cash equivalents at beginning of period 393,787 197,150 Cash and cash equivalents at end of period $ 404,218 $ 342,667 Cash dividends paid per share $ 2.13 $ 1.92 Lincoln Electric Holdings, Inc. Segment Highlights (1) (In thousands) (Unaudited) Americas International The Harris Corporate / Welding Welding Products Group Eliminations Consolidated Three months ended September 30, 2024 Net sales $ 637,026 $ 216,224 $ 130,509 $ — $ 983,759 Inter-segment sales 30,845 7,371 3,155 (41,371 ) — Total sales $ 667,871 $ 223,595 $ 133,664 $ (41,371 ) $ 983,759 Net income $ 100,756 As a percent of total sales 10.2 % EBIT (1) $ 102,158 $ 17,175 $ 20,690 $ 3,893 $ 143,916 As a percent of total sales 15.3 % 7.7 % 15.5 % 14.6 % Special items charges (3) 23,357 2,926 1,269 610 28,162 Adjusted EBIT (2) $ 125,515 $ 20,101 $ 21,959 $ 4,503 $ 172,078 As a percent of total sales 18.8 % 9.0 % 16.4 % 17.5 % Three months ended September 30, 2023 Net sales $ 665,228 $ 242,010 $ 125,976 $ — $ 1,033,214 Inter-segment sales 28,875 4,896 2,299 (36,070 ) — Total sales $ 694,103 $ 246,906 $ 128,275 $ (36,070 ) $ 1,033,214 Net income $ 129,343 As a percent of total sales 12.5 % EBIT (1) $ 132,420 $ 22,369 $ 20,405 $ (2,952 ) $ 172,242 As a percent of total sales 19.1 % 9.1 % 15.9 % 16.7 % Special items charges (4) 4,056 7,870 — — 11,926 Adjusted EBIT (2) $ 136,476 $ 30,239 $ 20,405 $ (2,952 ) $ 184,168 As a percent of total sales 19.7 % 12.2 % 15.9 % 17.8 % (1) EBIT is defined as Operating income plus Other (expense) income. (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. (3) Special items in 2024 primarily reflect Rationalization net charges of $16,282 in Americas Welding, $2,676 in International Welding and $1,269 in Harris Products Group . In addition, there was an amortization of step up in value of acquired inventories of $3,109 and $250 in Americas Welding and International Welding, respectively, pension settlement charges of $3,966 in Americas Welding and acquisition transaction costs of $610 in Corporate/Eliminations. (4) Special items in 2023 primarily reflect amortization of step up in value of acquired inventories of $3,648 and $1,204 in Americas and International Welding, respectively, and rationalization and asset impairment net charges of $408 and $6,666 in Americas and International Welding, respectively. Lincoln Electric Holdings, Inc. Segment Highlights (In thousands) (Unaudited) Americas International The Harris Corporate / Welding Welding Products Group Eliminations Consolidated Nine months ended September 30, 2024 Net sales $ 1,910,061 $ 690,743 $ 385,835 $ — $ 2,986,639 Inter-segment sales 98,624 24,628 9,520 (132,772 ) — Total sales $ 2,008,685 $ 715,371 $ 395,355 $ (132,772 ) $ 2,986,639 Net income $ 325,879 As a percent of total sales 10.9 % EBIT (1) $ 374,554 $ 36,357 $ 64,095 $ (16,496 ) $ 458,510 As a percent of total sales 18.6 % 5.1 % 16.2 % 15.4 % Special items charges (3) 23,711 37,230 2,666 4,656 68,263 Adjusted EBIT (2) $ 398,265 $ 73,587 $ 66,761 $ (11,840 ) $ 526,773 As a percent of total sales 19.8 % 10.3 % 16.9 % 17.6 % Nine months ended September 30, 2023 Net sales $ 2,000,839 $ 747,829 $ 384,454 $ — $ 3,133,122 Inter-segment sales 92,043 19,941 8,063 (120,047 ) — Total sales $ 2,092,882 $ 767,770 $ 392,517 $ (120,047 ) $ 3,133,122 Net income $ 388,605 As a percent of total sales 12.4 % EBIT (1) $ 399,002 $ 82,183 $ 58,898 $ (14,538 ) $ 525,545 As a percent of total sales 19.1 % 10.7 % 15.0 % 16.8 % Special items charges (4) 9,798 11,426 — — 21,224 Adjusted EBIT (2) $ 408,800 $ 93,609 $ 58,898 $ (14,538 ) $ 546,769 As a percent of total sales 19.5 % 12.2 % 15.0 % 17.5 % (1) EBIT is defined as Operating income plus Other income. (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. (3) Special items in 2024 primarily reflect rationalization net charges of $16,521 in Americas Welding, $32,030 in International Welding, including the impact of the Company’s disposition of its Russian entity, and $2,666 in Harris Products Group . In addition, there was a loss on asset disposal of $4,950 recorded to Other (expense) income in International Welding, an amortization of step up in value of acquired inventories of $3,224 and $250 in Americas Welding and International Welding, respectively, pension settlement charges of $3,966 in Americas Welding, and acquisition transaction costs of $4,551 in Corporate/Eliminations. (4) Special items in 2023 primarily reflect amortization of step up in value of acquired inventories of $9,390 and $2,862 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $408 and $10,210 in Americas and International Welding, respectively, and a gain on asset disposal of $1,646 in International Welding. Lincoln Electric Holdings, Inc. Change in Net Sales by Segment (In thousands) (Unaudited) Three Months Ended September 30 th Change in Net Sales by Segment Change in Net Sales due to: Net Sales Foreign Net Sales 2023 Volume Acquisitions Price Exchange 2024 Operating Segments Americas Welding $ 665,228 $ (57,292 ) $ 30,212 $ 2,505 $ (3,627 ) $ 637,026 International Welding 242,010 (28,899 ) 1,064 (1,349 ) 3,398 216,224 The Harris Products Group 125,976 (3,727 ) — 8,898 (638 ) 130,509 Consolidated $ 1,033,214 $ (89,918 ) $ 31,276 $ 10,054 $ (867 ) $ 983,759 % Change Americas Welding (8.6 ) % 4.5 % 0.4 % (0.5 ) % (4.2 ) % International Welding (11.9 ) % 0.4 % (0.6 ) % 1.4 % (10.7 ) % The Harris Products Group (3.0 ) % — 7.1 % (0.5 ) % 3.6 % Consolidated (8.7 ) % 3.0 % 1.0 % (0.1 ) % (4.8 ) % Nine Months Ended September 30 th Change in Net Sales by Segment Change in Net Sales due to: Net Sales Foreign Net Sales 2023 Volume Acquisitions Price Exchange 2024 Operating Segments Americas Welding $ 2,000,839 $ (145,610 ) $ 46,796 $ 11,311 $ (3,275 ) $ 1,910,061 International Welding 747,829 (50,728 ) 1,121 (8,508 ) 1,029 690,743 The Harris Products Group 384,454 (15,106 ) — 17,069 (582 ) 385,835 Consolidated $ 3,133,122 $ (211,444 ) $ 47,917 $ 19,872 $ (2,828 ) $ 2,986,639 % Change Americas Welding (7.3 ) % 2.3 % 0.6 % (0.2 ) % (4.5 ) % International Welding (6.8 ) % 0.1 % (1.1 ) % 0.1 % (7.6 ) % The Harris Products Group (3.9 ) % — 4.4 % (0.2 ) % 0.4 % Consolidated (6.7 ) % 1.5 % 0.6 % (0.1 ) % (4.7 ) % View source version on businesswire.com : https://www.businesswire.com/news/home/20241031404876/en/ Amanda Butler Vice President, Investor Relations & Communications Tel: 216.383.2534 Email: [email protected] Source: Lincoln Electric Holdings, Inc.

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