Fourth Quarter 2020 Highlights
|
CLEVELAND, Feb. 12, 2021 (GLOBE NEWSWIRE) – Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported net income of $ 65.1 million, or diluted earnings per share, for the fourth quarter of 2020 ( EPS) of $ 1.08, including special after-tax items of $ 9.9 million or $ 0.16 EPS. This compares to net income for the same period last year of $ 63.7 million, or $ 1.03 per share, which included special after-tax items of $ 7.3 million, or $ 0.12 per share. Excluding these items, adjusted net income for the fourth quarter of 2020 was $ 75.0 million, or $ 1.24 of adjusted earnings per share. This compares to adjusted net income of $ 71.0 million or adjusted earnings per share of $ 1.15 for the same period last year.
Revenue in the fourth quarter of 2020 declined 5.8% to $ 693.8 million after organic revenue decreased 5.6% and currencies decreased 0.2%. Operating income for the fourth quarter of 2020 was $ 83.4 million, or 12.0% of sales, including $ 9.5 million in rationalization costs. This corresponds to an operating income of $ 82.7 million or 11.2% of sales for the same period last year. Adjusted operating income, excluding special items, was $ 92.9 million, or 13.4% of sales, compared to $ 91.6 million, or 12.4% of sales, for the same period last year.
"I am proud of the excellent teamwork our organization has shown in this challenging year as we have focused on serving our customers safely and improving demand in the fourth quarter," said Christopher L. Mapes, Chairman, President and Chief Executive Officer Our strategic cost-cutting initiatives and actions resulted in record cash flows, strong cash conversion and earnings growth, and record safety and environmental performance for the quarter. "Mapes continued," Looking ahead, we are well positioned to capitalize on growth and increase profitability and returns as we focus on achieving our long-term goals of the Higher Standard 2025 strategy and superior long-term value for to reach our stakeholders. "
Twelve months of 2020 summary
Net income for the twelve months ended December 31, 2020 was $ 206.1 million, or $ 3.42 per share, including special after-tax items of $ 43.8 million, or $ 0.73 per share. This compares to net income for the same period last year of $ 293.1 million, or $ 4.68 per share, which included net after-tax items of $ 1.5 million, or $ 0.02 per share. Excluding these items, adjusted net income for the twelve months ended December 31, 2020 was $ 249.9 million, or $ 4.15 of adjusted earnings per share, compared to adjusted net income of $ 294.6 million, or $ 4.70 of adjusted earnings Earnings per share in the comparable period 2019.
Revenue declined 11.6% to $ 2.7 billion for the twelve months ended December 31, 2020 after organic revenue declined 12.2% and adverse exchange rates decreased 0.7%, partly due to a gain of 1.3% from acquisitions was offset. Operating income for the twelve months ended December 31, 2020 was $ 282.1 million, or 10.6% of sales. This corresponds to an operating income of $ 370.9 million, or 12.4% of sales, for the same period of 2019. Excluding special items, adjusted operating income was $ 328.3 million, or 12.4% of sales, compared to 387.9 million . USD or 12.9% of sales in the same period of 2019.
Webcast information
A conference call to discuss the fourth quarter 2020 results will be broadcast live today, February 12, 2021 at 10:00 a.m. Eastern Time. This webcast is available at https://ir.lincolnelectric.com. Listeners should go to the website before calling to register, download, and install any required audio software. A replay of the webcast will be available on the company's website.
If investors would like to ask questions, please call (877) 344-3899 (Domestic) or (315) 625-3087 (International) and use confirmation code 7190715. Telephone attendees will be asked to dial in 10 to 15 minutes prior to the start of the Telephone conference.
The financial results for the fourth quarter of 2020 are also available at https://ir.lincolnelectric.com.
About Lincoln Electric
Lincoln Electric is a world leader in the development, manufacture and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting systems, and has a world-leading position in brazing and soldering alloys. Lincoln is headquartered in Cleveland, Ohio, with 55 manufacturing facilities in 18 countries and a global network of distributors and sales offices in more than 160 countries. For more information about Lincoln Electric and its products and services, please visit the company's website at https://www.lincolnelectric.com.
Non-GAAP information
Adjusted Income from Operations, Adjusted Net Income, Adjusted EBIT, Adjusted Effective Tax Rate, Adjusted Diluted Earnings per Share, Organic Sales, Cash Conversion, Return on Investments, and Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") are non-GAAP financial measures. Management uses non-GAAP measures to evaluate the company's operational performance by excluding certain disclosed special items that management believes are not representative of the company's core business. Management believes that eliminating these special items will allow them to make better period-to-period comparisons and more meaningfully compare the company's operational performance compared to other companies in its industry. In addition, management believes that non-GAAP financial metrics provide investors with meaningful information that will enable a deeper understanding of the company's operating results and allow investors to more thoroughly analyze financial and business trends. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures, and are subject to 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 about the future contained in this press 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 can generally be identified by the use of words such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "forecast", "guideline". or words of similar meaning. Actual results could differ materially from these statements due to a number of factors that could adversely affect the company's results of operations. The factors include, but are not limited to: general economic, financial and market conditions; the effectiveness of business initiatives; Completion of Planned Disposals; Interest; Disruptions, uncertainties or volatility in the credit markets that could limit our access to capital; Exchange rates and devaluations; adverse outcome of pending or potential legal disputes; actual cost of the company's rationalization plans; potential acquisitions, including the company's ability to successfully integrate acquisitions; Market risks and price fluctuations associated with the purchase of raw materials and energy; global regulatory complexity; the effects of changes in tax law; Duty rates in the countries in which the company does business; and the potential impact on the company or its customers, suppliers and the economy of events beyond our control, such as political unrest, acts of terrorism, natural disasters and pandemics, including the current coronavirus disease ("COVID-19") outbreak in general. The company has learned the negative impact of COVID-19 on its markets and operations. However, the final duration and severity of the company's business is not yet known. Although the company's customers have reopened and increased the level of operations, these customers may be forced to close or restrict operations if COVID-19 cases recur. Given this ongoing economic and operational uncertainty about the impact of COVID-19, the final financial impact cannot be reasonably estimated at this time. Further information can be found under “Point 1A. Risk Factors ”in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.
Lincoln Electric Holdings, Inc.
Financial highlights
(In thousands, except amounts per share)
(Unchecked)
Consolidated income statement
| Fav (Unfav) too | |||||||||||||||||||
| Three months to December 31st | Previous year | ||||||||||||||||||
| 2020 | % of sales | 2019 | % of sales | $ | %. | ||||||||||||||
| Net sales | $ | 693.794 | 100.0 | %. | $ | 736,307 | 100.0 | %. | $ | (42,513 | ) | (5.8 | )% | ||||||
| Cost of goods sold | 464,540 | 67.0 | %. | 495.373 | 67.3 | %. | 30,833 | 6.2 | %. | ||||||||||
| Gross profit | 229.254 | 33.0 | %. | 240.934 | 32.7 | %. | (11,680 | ) | (4.8 | )% | |||||||||
| Selling, general and administrative expenses | 136,362 | 19.7 | %. | 149.381 | 20.3 | %. | 13,019 | 8.7 | %. | ||||||||||
| Expenses for rationalization and impairment of assets | 9,452 | 1.4 | %. | 8,851 | 1.2 | %. | (601 | ) | (6.8 | )% | |||||||||
| Operating profit | 83,440 | 12.0 | %. | 82,702 | 11.2 | %. | 738 | 0.9 | %. | ||||||||||
| Net interest expense | 5.082 | 0.7 | %. | 5.794 | 0.8 | %. | 712 | 12.3 | %. | ||||||||||
| Other income (expenses) | 2,774 | 0.4 | %. | 3.386 | 0.5 | %. | (612 | ) | (18.1 | )% | |||||||||
| Profit before tax | 81.132 | 11.7 | %. | 80.294 | 10.9 | %. | 838 | 1.0 | %. | ||||||||||
| Income tax | 16,062 | 2.3 | %. | 16,578 | 2.3 | %. | 516 | 3.1 | %. | ||||||||||
| Effective tax rate | 19.8 | %. | 20.6 | %. | 0.8 | %. | |||||||||||||
| Net income for the year including non-controlling interests | 65,070 | 9.4 | %. | 63,716 | 8.7 | %. | 1,354 | 2.1 | %. | ||||||||||
| Non-controlling interests in the earnings (loss) of the subsidiaries | (8th | ) | – – | – – | – – | (8th | ) | (100.0 | )% | ||||||||||
| Net result | $ | 65,078 | 9.4 | %. | $ | 63,716 | 8.7 | %. | $ | 1,362 | 2.1 | %. | |||||||
| Basic earnings per share | $ | 1.09 | $ | 1.04 | $ | 0.05 | 4.8 | %. | |||||||||||
| Diluted earnings per share | $ | 1.08 | $ | 1.03 | $ | 0.05 | 4.9 | %. | |||||||||||
| Weighted Average Stocks (Basis) | 59,567 | 60.996 | |||||||||||||||||
| Weighted Average Stocks (Diluted) | 60,301 | 61.710 | |||||||||||||||||
| Fav (Unfav) too | ||||||||||||||||||
| Twelve months to December 31st | Previous year | |||||||||||||||||
| 2020 | % of sales | 2019 | % of sales | $ | %. | |||||||||||||
| Net sales | $ | 2,655,400 | 100.0 | %. | $ | 3,003,272 | 100.0 | %. | $ | (347.872 | ) | (11.6 | )% | |||||
| Cost of goods sold | 1,784,059 | 67.2 | %. | 1,995,685 | 66.5 | %. | 211.626 | 10.6 | %. | |||||||||
| Gross profit | 871,341 | 32.8 | %. | 1,007,587 | 33.5 | %. | (136, 246 | ) | (13.5 | )% | ||||||||
| Selling, general and administrative expenses | 543,802 | 20.5 | %. | 621,489 | 20.7 | %. | 77,687 | 12.5 | %. | |||||||||
| Expenses for rationalization and impairment of assets | 45.468 | 1.7 | %. | 15,188 | 0.5 | %. | (30.280 | ) | (199.4 | )% | ||||||||
| Operating profit | 282.071 | 10.6 | %. | 370.910 | 12.4 | %. | (88.839 | ) | (24.0 | )% | ||||||||
| Net interest expense | 21,973 | 0.8 | %. | 23,415 | 0.8 | %. | 1,442 | 6.2 | %. | |||||||||
| Other income (expenses) | 3,942 | 0.1 | %. | 20,998 | 0.7 | %. | (17.056 | ) | (81.2 | )% | ||||||||
| Profit before tax | 264.040 | 9.9 | %. | 368.493 | 12.3 | %. | (104, 453 | ) | (28.3 | )% | ||||||||
| Income tax | 57,896 | 2.2 | %. | 75.410 | 2.5 | %. | 17,514 | 23.2 | %. | |||||||||
| Effective tax rate | 21.9 | %. | 20.5 | %. | (1.5 | )% | ||||||||||||
| Net income for the year including non-controlling interests | 206.144 | 7.8 | %. | 293.083 | 9.8 | %. | (86.939 | ) | (29.7 | )% | ||||||||
| Non-controlling interests in the earnings (loss) of the subsidiaries | 29 | – – | (26 | ) | – – | 55 | 211.5 | %. | ||||||||||
| Net result | $ | 206.115 | 7.8 | %. | $ | 293.109 | 9.8 | %. | $ | (86.994 | ) | (29.7 | )% | |||||
| Basic earnings per share | $ | 3.46 | $ | 4.73 | $ | (1.27 | ) | (26.8 | )% | |||||||||
| Diluted earnings per share | $ | 3.42 | $ | 4.68 | $ | (1.26 | ) | (26.9 | )% | |||||||||
| Weighted Average Stocks (Basis) | 59,633 | 61,960 | ||||||||||||||||
| Weighted Average Stocks (Diluted) | 60.248 | 62,658 | ||||||||||||||||
Lincoln Electric Holdings, Inc.
Financial highlights
(In thousands)
(Unchecked)
Balance highlights
| Selected consolidated balance sheet data | December 31, 2020 | December 31, 2019 | |||||
| Cash and cash equivalents | $ | 257.279 | $ | 199,563 | |||
| Total current assets | 1,112,343 | 1,075,581 | |||||
| Property, plant and equipment, net | 522.092 | 529,344 | |||||
| Total assets | 2,314,453 | 2,371,213 | |||||
| Total short-term liabilities | 549,449 | 563.135 | |||||
| Short Term Debt (1) | 2.734 | 34,969 | |||||
| Long-term debt, less short-term portion | 715.456 | 712.302 | |||||
| Total capital | 790.250 | 819.077 | |||||
| Working capital | December 31, 2020 | December 31, 2019 | |||||
| Claims, net | $ | 373.487 | $ | 374.649 | |||
| Stocks | 381.258 | 393,748 | |||||
| Delivery and performance | 256,530 | 273.002 | |||||
| Working capital | $ | 498.215 | $ | 495.395 | |||
| Average operating working capital to net sales (2) | 18.0 | %. | 16.8 | %. | |||
| The invested capital | December 31, 2020 | December 31, 2019 | |||||
| Short Term Debt (1) | $ | 2.734 | $ | 34,969 | |||
| Long-term debt, less short-term portion | 715.456 | 712.302 | |||||
| Total debt | 718.190 | 747.271 | |||||
| Total capital | 790.250 | 819.077 | |||||
| The invested capital | $ | 1,508,440 | $ | 1,566,348 | |||
| Total debt / invested capital | 47.6 | %. | 47.7 | %. | |||
| (1) | Includes the current portion of long-term debt. |
| (2) | Average operating working capital to net sales is defined as the operating working capital at the end of the reporting period divided by the annualized rolling three months of net sales. |
Lincoln Electric Holdings, Inc.
Financial highlights
(In thousands, except amounts per share)
(Unchecked)
Non-GAAP Financial Measures
| Three months to December 31st | Twelve months to December 31st | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Operating profit as reported | $ | 83,440 | $ | 82,702 | $ | 282.071 | $ | 370.910 | |||||||||
| Special items (before taxes): | |||||||||||||||||
| Expenses for rationalization and impairment of assets (2) | 9,452 | 8,851 | 45.468 | 15,188 | |||||||||||||
| Acquisition Transaction and Integration Costs (3) | – – | – – | – – | 1.804 | |||||||||||||
| Depreciation of the increase in value of acquired inventories (4) | – – | – – | 806 | 3,008 | |||||||||||||
| Profits from the sale of assets (5) | – – | – – | – – | (3.045 | ) | ||||||||||||
| Adjusted operating profit (1) | $ | 92.892 | $ | 91,553 | $ | 328,345 | $ | 387.865 | |||||||||
| As a percentage of total sales | 13.4 | %. | 12.4 | %. | 12.4 | %. | 12.9 | %. | |||||||||
| Net profit as reported | $ | 65,078 | $ | 63,716 | $ | 206.115 | $ | 293.109 | |||||||||
| Special articles: | |||||||||||||||||
| Expenses for rationalization and impairment of assets (2) | 9,452 | 8,851 | 45.468 | 15,188 | |||||||||||||
| Acquisition Transaction and Integration Costs (3) | – – | – – | – – | 1.804 | |||||||||||||
| Annuity Settlement Fees (6) | 1,597 | – – | 8,119 | – – | |||||||||||||
| Depreciation of the increase in value of acquired inventories (4) | – – | – – | 806 | 3,008 | |||||||||||||
| Profits from the sale of assets (5) | – – | – – | – – | (3.554 | ) | ||||||||||||
| Profit on change of control (7) | – – | – – | – – | (7.601 | ) | ||||||||||||
| Tax effect of special items (8) | (1.131 | ) | (1.567 | ) | (10,594 | ) | (7.386 | ) | |||||||||
| Adjusted net income (1) | 74.996 | 71,000 | 249.914 | 294,568 | |||||||||||||
| Non-controlling interests in the earnings (loss) of the subsidiaries | (8th | ) | – – | 29 | (26 | ) | |||||||||||
| Net interest expense | 5.082 | 5.794 | 21,973 | 23,415 | |||||||||||||
| Income taxes as reported | 16,062 | 16,578 | 57,896 | 75.410 | |||||||||||||
| Tax effect of special items (8) | 1.131 | 1.567 | 10,594 | 7.386 | |||||||||||||
| Adjusted EBIT (1) | $ | 97.263 | $ | 94,939 | $ | 340.406 | $ | 400,753 | |||||||||
| Effective tax rate as stated | 19.8 | %. | 20.6 | %. | 21.9 | %. | 20.5 | %. | |||||||||
| Net tax burden effect for special items | (1.1 | )% | (0.2 | )% | (0.4 | )% | 1.4 | %. | |||||||||
| Adjusted effective tax rate (1) | 18.7 | %. | 20.4 | %. | 21.5 | %. | 21.9 | %. | |||||||||
| Diluted earnings per share as reported | $ | 1.08 | $ | 1.03 | $ | 3.42 | $ | 4.68 | |||||||||
| Special items per share | 0.16 | 0.12 | 0.73 | 0.02 | |||||||||||||
| Adjusted diluted earnings per share (1) | $ | 1.24 | $ | 1.15 | $ | 4.15 | $ | 4.70 | |||||||||
| Weighted Average Stocks (Diluted) | 60,301 | 61.710 | 60.248 | 62,658 | |||||||||||||
| (1) | Adjusted Operating Income, Adjusted Net Income, Adjusted EBIT, Adjusted Effective Tax Rate, and Adjusted Diluted Earnings per Share are non-GAAP financial measures. See the Non-GAAP Information section. |
| (2) | Primarily related to severance payments, impairment of long-lived assets, and gains or losses on the disposal of assets. |
| (3) | Related to the acquisition of Air Liquide Welding and are included in selling, general and administrative expenses. |
| (4) | Related to an acquisition and are included in the cost of the goods sold. |
| (5) | Included primarily in the cost of goods sold. |
| (6) | Related to lump-sum pension payments and are included in other income (expenses). |
| (7) | Refers to the Askaynak acquisition and is included in other income (expenses). |
| (8th) | Includes the net tax impact of special items recognized in the respective periods, including a tax benefit of $ 4,852 on the settlement of a tax item and tax deductions related to an interest in a subsidiary for the twelve months ended December 31, 2019. |
| The tax effect of special items on pre-tax earnings was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and the nature of each special item. |
Lincoln Electric Holdings, Inc.
Financial highlights
(In thousands, except amounts per share)
(Unchecked)
Non-GAAP Financial Measures
| Twelve months to December 31st | |||||||||
| Return on invested capital | 2020 | 2019 | |||||||
| Net profit as reported | $ | 206.115 | $ | 293.109 | |||||
| Expenses for rationalization and impairment of assets | 45.468 | 15,188 | |||||||
| Acquisition transaction and integration costs | – – | 1.804 | |||||||
| Pension settlement fees | 8,119 | – – | |||||||
| Depreciation of the increase in value of the inventories acquired | 806 | 3,008 | |||||||
| Profits from the disposal of assets | – – | (3.554 | ) | ||||||
| Profit on change of control | – – | (7.601 | ) | ||||||
| Tax effect of special items (2) | (10,594 | ) | (7.386 | ) | |||||
| Adjusted net income (1) | $ | 249.914 | $ | 294,568 | |||||
| Plus: After-tax interest expense of $ 6,026 and $ 6,477 in 2020 and 2019, respectively | 17,933 | 19,465 | |||||||
| Less: Interest income less taxes of $ 500 and $ 631 in 2020 and 2019, respectively | 1,486 | 1,896 | |||||||
| Adjusted earnings before taxes | $ | 266,361 | $ | 312.137 | |||||
| The invested capital | December 31, 2020 | December 31, 2019 | |||||||
| Short term debt | $ | 2.734 | $ | 34,969 | |||||
| Long-term debt, less short-term portion | 715.456 | 712.302 | |||||||
| Total debt | 718.190 | 747.271 | |||||||
| Total capital | 790.250 | 819.077 | |||||||
| The invested capital | $ | 1,508,440 | $ | 1,566,348 | |||||
| Return on investment (1) | 17.7 | %. | 19.9 | %. | |||||
| Twelve months to December 31st | |||||||||
| Total debt / EBITDA | 2020 | 2019 | |||||||
| Net profit as reported | $ | 206.115 | $ |
293.109 | |||||
| Income tax | 57,896 | 75.410 | |||||||
| Net interest expense | 21,973 | 23,415 | |||||||
| Depreciation | 80,492 | 81.487 | |||||||
| EBITDA (1) | $ | 366,476 | $ | 473,421 | |||||
| December 31, 2020 | December 31, 2019 | ||||||||
| Total debt | $ |
718.190 | $ |
747.271 | |||||
| Total debt / EBITDA | 1.96 | 1.58 | |||||||
| (1) | Adjusted Net Income, Return on Investments, and EBITDA are non-GAAP financial measures. See the Non-GAAP Information section. |
| (2) | Includes the net tax impact of special items recognized in the respective periods, including a tax benefit of $ 4,852 on the settlement of a tax item and tax deductions related to an interest in a subsidiary for the twelve months ended December 31, 2019. |
| The tax effect of special items on pre-tax earnings was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and the nature of each special item. |
Lincoln Electric Holdings, Inc.
Financial highlights
(In thousands, except amounts per share)
(Unchecked)
Abridged consolidated cash flow statement
| Three months to December 31st | ||||||||
| 2020 | 2019 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net result | $ | 65,078 | $ | 63,716 | ||||
| Non-controlling interests in the earnings (loss) of the subsidiaries | (8th | ) | – – | |||||
| Net income for the year including non-controlling interests | 65,070 | 63,716 | ||||||
| Adjustments to reconcile the net result including non-controlling interests in the cash flow from operating activities: | ||||||||
| Expenses for rationalization and depreciation of assets (profits) | (92 | ) | 2,431 | |||||
| Depreciation | 19,926 | 21,087 | ||||||
| Equity gain in affiliated companies, net | (85 | ) | (161 | ) | ||||
| Other non-cash items, net | 5.214 | 12.203 | ||||||
| Changes in operating assets and liabilities minus the effects of acquisitions: | ||||||||
| Acceptance of claims | 10,433 | 26,291 | ||||||
| Fall in stocks | 26,181 | 24,453 | ||||||
| Increase in trade payables | 24,414 | 25,863 | ||||||
| Net change in other current assets and liabilities | (9,621 | ) | (51.294 | ) | ||||
| Net change in other non-current assets and liabilities | (5,639 | ) | (2.070 | ) | ||||
| CASH GENERATED FROM OPERATIONS | 135,801 | 122,519 | ||||||
| INVESTMENT ACTIVITIES: | ||||||||
| Investments | (22.085 | ) | (16.064 | ) | ||||
| Acquisitions of businesses net of cash acquired | – – | 2.018 | ||||||
| Income from the sale of property, plant and equipment | 710 | 18th | ||||||
| Other investing activities | 2,321 | – – | ||||||
| NET CASH FOR INVESTMENTS | (19.054 | ) | (14,028 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Net change in borrowing | 1.375 | 21,889 | ||||||
| Income from the exercise of stock options | 9.231 | 8,137 | ||||||
| Purchase of own shares | (257 | ) | (70.751 | ) | ||||
| Cash distribution to shareholders | (29, 173 | ) | (28.758 | ) | ||||
| NET MONEY USED THROUGH FINANCING ACTIVITIES | (18.824 | ) | (69, 483 | ) | ||||
| Effect of changes in exchange rates on cash and cash equivalents | 6.877 | 3,943 | ||||||
| Increase in cash and cash equivalents | 104,800 | 42,951 | ||||||
| Cash and cash equivalents at the beginning of the period | 152.479 | 156.612 | ||||||
| Cash and cash equivalents at the end of the reporting period | $ | 257.279 | $ | 199,563 | ||||
| Cash distribution per share | $ | 0.49 | $ | 0.47 | ||||
Lincoln Electric Holdings, Inc.
Financial highlights
(In thousands, except amounts per share)
(Unchecked)
Abridged consolidated cash flow statement
| Fiscal year ended December 31 | ||||||||
| 2020 | 2019 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net result | $ | 206.115 | $ | 293.109 | ||||
| Non-controlling interests in the earnings (loss) of the subsidiaries | 29 | (26 | ) | |||||
| Net income for the year including non-controlling interests | 206.144 | 293.083 | ||||||
| Adjustments to reconcile the net result including non-controlling interests in the cash flow from operating activities: | ||||||||
| Net cost of rationalization and depreciation of assets | 21,835 | 3,500 | ||||||
| Depreciation | 80,492 | 81.487 | ||||||
| Equity gain in affiliated companies, net | (408 | ) | (1.427 | ) | ||||
| Profit on change of control | – – | (7.601 | ) | |||||
| Other non-cash items, net | 2,444 | 21,488 | ||||||
| Changes in operating assets and liabilities minus the effects of acquisitions: | ||||||||
| Acceptance of claims | 3,582 | 50.394 | ||||||
| Decrease (increase) in inventories | 22,751 | (12.023 | ) | |||||
| Decline in trade payables | (17.919 | ) | (8.339 | ) | ||||
| Net change in other current assets and liabilities | 37.021 | (16,954 | ) | |||||
| Net change in other non-current assets and liabilities | (4,580) | ) | (423 | ) | ||||
| CASH GENERATED FROM OPERATIONS | 351,362 | 403.185 | ||||||
| INVESTMENT ACTIVITIES: | ||||||||
| Investments | (59,201 | ) | (69.615 | ) | ||||
| Acquisitions of businesses net of cash acquired | – – | (134.717 | ) | |||||
| Income from the sale of property, plant and equipment | 7.667 | 9,509 | ||||||
| Other investing activities | 2,321 | 2,000 | ||||||
| NET MONEY USED THROUGH INVESTMENT IN ACTIVITIES | (49.213 | ) | (192.823 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Net change in borrowing | (31.760 | ) | 24,322 | |||||
| Income from the exercise of stock options | 17,192 | 14,347 | ||||||
| Purchase of own shares | (113.455 | ) | (292.693 | ) | ||||
| Cash distribution to shareholders | (118, 118 | ) | (117.920 | ) | ||||
| NET MONEY USED THROUGH FINANCING ACTIVITIES | (246,141 | ) | (371,944 | ) | ||||
| Effect of changes in exchange rates on cash and cash equivalents | 1,708 | 2,296 | ||||||
| INCREASE (DECREASE) IN CASH AND MONEY EQUIVALENTS | 57,716 | (159, 286 | ) | |||||
| Cash and cash equivalents at the beginning of the period | 199,563 | 358,849 | ||||||
| Cash and cash equivalents at the end of the reporting period | $ | 257.279 | $ | 199,563 | ||||
| Cash distribution per share | $ | 1.96 | $ | 1.88 | ||||
Lincoln Electric Holdings, Inc.
Segment highlights (1)
(In thousands)
(Unchecked)
| America | International | The harris | Corporate / | ||||||||||||||
| welding | welding | Product group | Eliminations | Consolidated | |||||||||||||
| Three months ended on December 31, 2020 | |||||||||||||||||
| Net sales | $ | 386,571 | $ | 214.782 | $ | 92.441 | $ | – – | $ | 693.794 | |||||||
| Cross-segment sales | 27,734 | 4,827 | 1.658 | (34.219 | ) | – – | |||||||||||
| total | $ | 414.305 | $ | 219,609 | $ | 94.099 | $ | (34.219 | ) | $ | 693.794 | ||||||
| Net result | $ | 65,078 | |||||||||||||||
| As a percentage of total sales | 9.4 | %. | |||||||||||||||
| EBIT (1) | $ | 68,456 | $ | 4,949 | $ | 13,362 | $ | (553 | ) | $ | 86.214 | ||||||
| As a percentage of total sales | 16.5 | %. | 2.3 | %. | 14.2 | %. | 12.4 | %. | |||||||||
| Special Item Fees (Prizes) (3) | 748 | 10.301 | – – | – – | 11,049 | ||||||||||||
| Adjusted EBIT (2) | $ | 69.204 | $ | 15,250 | $ | 13,362 | $ | (553 | ) | $ | 97.263 | ||||||
| As a percentage of total sales | 16.7 | %. | 6.9 | %. | 14.2 | %. | 14.0 | %. | |||||||||
| Three months ended on December 31, 2019 | |||||||||||||||||
| Net sales | $ | 437.899 | $ | 218,606 | $ | 79,802 | $ | – – | $ | 736,307 | |||||||
| Cross-segment sales | 28,042 | 4.853 | 1,650 | (34.545 | ) | – – | |||||||||||
| total | $ | 465,941 | $ | 223.459 | $ | 81,452 | $ | (34.545 | ) | $ | 736,307 | ||||||
| Net income | $ | 63.716 | |||||||||||||||
| As a percent of total sales | 8.7 | %. | |||||||||||||||
| EBIT (1) | $ | 75.006 | $ | 4,501 | $ | 8,886 | $ | (2.305 | ) | $ | 86.088 | ||||||
| As a percent of total sales | 16.1 | %. | 2.0 | %. | 10.9 | %. | 11.7 | %. | |||||||||
| Special items charges (gains) (4) | – – | 7,081 | 1,770 | – – | 8,851 | ||||||||||||
| Adjusted EBIT (2) | $ | 75.006 | $ | 11,582 | $ | 10.656 | $ | (2.305 | ) | $ | 94.939 | ||||||
| As a percent of total sales | 16.1 | %. | 5.2 | %. | 13.1 | %. | 12.9 | %. | |||||||||
| (1) | EBIT is defined as operating income plus other income (expense). |
| (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 2020 reflect Rationalization and asset impairment gains of $ 849 and charges of $ 10,301 in Americas Welding and International Welding, respectively and pension settlement charges of $ 1,597 in Americas Welding. |
| (4) | Special items in 2019 reflect Rationalization and asset impairment charges of $ 7,081 in International Welding and $ 1,770 in The Harris Products Group. |
Lincoln Electric Holdings, Inc.
Segment highlights (1)
(In thousands)
(Unchecked)
| Americas | International | The Harris | Corporate / | ||||||||||||||
| Welding | Welding | Products Group | Eliminations | Consolidated | |||||||||||||
| Year ended December 31, 2020 | |||||||||||||||||
| Net sales | $ | 1,509,870 | $ | 786,809 | $ | 358.721 | $ | – – | $ | 2,655,400 | |||||||
| Inter-segment sales | 109.378 | 18,494 | 7.034 | (134.906 | ) | – – | |||||||||||
| total | $ | 1,619,248 | $ | 805,303 | $ | 365.755 | $ | (134.906 | ) | $ | 2,655,400 | ||||||
| Net income | $ | 206.115 | |||||||||||||||
| As a percent of total sales | 7.8 | %. | |||||||||||||||
| EBIT (1) | $ | 210.739 | $ | 25.575 | $ | 55.154 | $ | (5.455 | ) | $ | 286,013 | ||||||
| As a percent of total sales | 13.0 | %. | 3.2 | %. | 15.1 | %. | 10.8 | %. | |||||||||
| Special items charges (gains) (3) | 34.989 | 19.404 | – – | – – | 54.393 | ||||||||||||
| Adjusted EBIT (2) | $ | 245.728 | $ | 44.979 | $ | 55.154 | $ | (5.455 | ) | $ | 340.406 | ||||||
| As a percent of total sales | 15.2 | %. | 5.6 | %. | 15.1 | %. | 12.8 | %. | |||||||||
| Year ended December 31, 2019 | |||||||||||||||||
| Net sales | $ | 1,815,746 | $ | 854.376 | $ | 333,150 | $ | – – | $ | 3,003,272 | |||||||
| Inter-segment sales | 123.342 | 17.691 | 7.487 | (148,520 | ) | – – | |||||||||||
| total | $ | 1,939,088 | $ | 872.067 | $ | 340.637 | $ | (148,520 | ) | $ | 3,003,272 | ||||||
| Net income | $ | 293.109 | |||||||||||||||
| As a percent of total sales | 9.8 | %. | |||||||||||||||
| EBIT (1) | $ | 312,604 | $ | 48.125 | $ | 43.931 | $ | (12.752 | ) | $ | 391.908 | ||||||
| As a percent of total sales | 16.1 | %. | 5.5 | %. | 12.9 | %. | 13.0 | %. | |||||||||
| Special items charges (gains) (4) | 3.115 | 2.156 | 1,770 | 1.804 | 8,845 | ||||||||||||
| Adjusted EBIT (2) | $ | 315.719 | $ | 50.281 | $ | 45.701 | $ | (10,948 | ) | $ | 400.753 | ||||||
| As a percent of total sales | 16.3 | %. | 5.8 | %. | 13.4 | %. | 13.3 | %. | |||||||||
| (1) | EBIT is defined as operating income plus other income (expense). |
| (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 2020 reflect Rationalization and asset impairment net charges of $ 26,870 and $ 18,598 in Americas Welding and International Welding, respectively, amortization of step up in value of acquired inventories of $ 806 in International Welding related to an acquisition, and pension settlement charges of $ 8,119 in Americas Welding. |
| (4) | Special items in 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding, $11,702 in International Welding and $1,770 in The Harris Products Group, amortization of step up in value of acquired inventories of $1,399 in Americas Welding and $1,609 in International Welding, gains on disposals of assets of $3,554 in International Welding, a gain on change in control of $7,601 related to the acquisition of Askaynak and acquisition transaction and integration costs of $1,804 in Corporate/Eliminations related to the acquisition of Air Liquide Welding |
Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unchecked)
Three Months Ended December 31st Change in Net Sales by Segment
| Change in Net Sales due to: | ||||||||||||||||||||
| Net Sales | Ausländisch | Net Sales | ||||||||||||||||||
| 2019 | Volumen | Acquisitions | Preis | Austausch | 2020 | |||||||||||||||
| Operating Segments | ||||||||||||||||||||
| Americas Welding | $ | 437,899 | $ | (54,412 | ) | $ | – – | $ | 5,164 | $ | (2,080 | ) | $ | 386,571 | ||||||
| International Welding | 218,606 | (7,341 | ) | – – | 1,101 | 2,416 | 214,782 | |||||||||||||
| The Harris Products Group | 79,802 | 5,872 | – – | 8,498 | (1,731 | ) | 92,441 | |||||||||||||
| Consolidated | $ | 736,307 | $ | (55,881 | ) | $ | – – | $ | 14,763 | $ | (1,395 | ) | $ | 693,794 | ||||||
| % Change | ||||||||||||||||||||
| Americas Welding | (12.4 | )% | – – | 1.2 | %. | (0.5 | )% | (11.7 | )% | |||||||||||
| International Welding | (3.4 | )% | – – | 0.5 | %. | 1.1 | %. | (1.7 | )% | |||||||||||
| The Harris Products Group | 7.4 | %. | – – | 10.6 | %. | (2.2 | )% | 15.8 | %. | |||||||||||
| Consolidated | (7.6 | )% | – – | 2.0 | %. | (0.2 | )% | (5.8 | )% | |||||||||||
Twelve Months Ended December 31st Change in Net Sales by Segment
| Change in Net Sales due to: | |||||||||||||||||||||||
| Net Sales | Ausländisch | Net Sales | |||||||||||||||||||||
| 2019 | Volumen | Acquisitions | Preis | Austausch | 2020 | ||||||||||||||||||
| Operating Segments | |||||||||||||||||||||||
| Americas Welding | $ | 1,815,746 | $ | (300,167 | ) | $ | 6,190 | $ | (2,315 | ) | $ | (9,584 | ) | $ | 1,509,870 | ||||||||
| International Welding | 854,376 | (93,264 | ) | 33,521 | (1,800 | ) | (6,024 | ) | 786,809 | ||||||||||||||
| The Harris Products Group | 333,150 | 12,242 | – – | 18,571 | (5,242 | ) | 358,721 | ||||||||||||||||
| Consolidated | $ | 3,003,272 | $ | (381,189 | ) | $ | 39,711 | $ | 14,456 | $ | (20,850 | ) | $ | 2,655,400 | |||||||||
| % Change | |||||||||||||||||||||||
| Americas Welding | (16.5 | )% | 0.3 | %. | (0.1 | )% | (0.5 | )% | (16.8 | )% | |||||||||||||
| International Welding | (10.9 | )% | 3.9 | %. | (0.2 | )% | (0.7 | )% | (7.9 | )% | |||||||||||||
| The Harris Products Group | 3.7 | %. | – – | 5.6 | %. | (1.6 | )% | 7.7 | %. | ||||||||||||||
| Consolidated | (12.7 | )% | 1.3 | %. | 0.5 | %. | (0.7 | )% | (11.6 | )% | |||||||||||||