Fourth Quarter and Full Year 2018 Highlights
  • Q4 EPS increases 275.0% to $1.35, Adjusted EPS increases 27.7% to $1.29
  • Strong cash flow generation
  • ROIC increases 450 basis points to 20.7%
  • $304 million returned to shareholders in 2018 through dividends and share repurchases
 

CLEVELAND, Feb. 14, 2019 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2018 net income of $86.8 million, or diluted earnings per share (EPS) of $1.35, which includes special item after-tax income of $3.3 million, or $0.06 EPS.  This compares with prior year net income of $24.2 million, or $0.36 EPS, which included special item after-tax charges of $43.3 million, or $0.65 EPS. Excluding these items, fourth quarter 2018 adjusted net income increased 23.7% to $83.5 million, or $1.29 EPS, as compared with $67.5 million, or $1.01 EPS in the prior year period.  The effective tax rate for the fourth quarter 2018 was 8.1% due to special items and discrete items.  Excluding special items, the adjusted effective tax rate was 14.7%, which compares to 25.8% in the comparable 2017 period.

Fourth quarter 2018 sales decreased 0.4% to $743.8 million with a 1.6% increase in organic sales.  Operating income for the fourth quarter 2018 was $94.9 million, or 12.8% of sales.  This compares with operating income of $76.3 million, or 10.2% of sales, in the comparable 2017 period.  On an adjusted basis, operating income increased 6.6% to $96.7 million and 90 basis points to 13.0% of sales, as compared with $90.7 million, or 12.1% of sales, in the prior year period.

“We achieved good profit improvement and solid cash flow generation in the fourth quarter, as we continued to successfully manage price/cost while investing in growth,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer.  “We capitalized on strong industrial growth in 2018, yielding record sales and earnings, and I remain confident in the long-term, sustainable value we are creating through our new technologies and solutions.  We are well positioned to drive margin growth and higher returns for our shareholders in 2019 as we continue to execute on our strategic initiatives.”

Twelve Months 2018 Summary

Net income for the twelve months ended December 31, 2018 was $287.1 million, or $4.37 EPS, which includes special item after-tax net charges of $29.6 million or $0.45 EPS.  This compares with $247.5 million, or $3.71 EPS, in the comparable 2017 period.  The prior year included special item after-tax net charges of $5.2 million, or $0.08 EPS.  Excluding these items, adjusted net income for the twelve months ended December 31, 2018 increased 25.3% to $316.6 million, or $4.82 EPS, compared with $252.7 million, or $3.79 EPS, in the comparable 2017 period.  The effective tax rate for the twelve months ended December 31, 2018 was 22.2% due to special items.  Excluding special items, the adjusted effective tax rate was 21.9%, which compares to 28.0% in the comparable 2017 period.

Sales increased 15.4% to $3.0 billion in the twelve months ended December 31, 2018 from a 9.1% benefit from acquisitions and 6.7% higher organic sales.  Operating income for the twelve months ended December 31, 2018 was $375.5 million, or 12.4% of sales.  This compares with operating income of $376.9 million, or 14.4% of sales, in the comparable 2017 period.  On an adjusted basis, 2018 operating income increased 14.7% to $405.3 million, or 13.4% of sales, as compared with $353.5 million, or 13.5% of sales, in the comparable 2017 period.

Webcast Information

A conference call to discuss fourth quarter 2018 financial results will be webcast live today, February 14, 2019, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://ir.lincolnelectric.com.  Listeners should go to the web site prior to the call to register, download and install any necessary audio software.  A replay of the webcast will be available on the Company's web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 5292068.  Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2018 can also be obtained at http://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market.  Headquartered in Cleveland, Ohio, Lincoln has 60 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.  For more information about Lincoln Electric and its products and services, visit the Company’s website at http://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted EBIT, Adjusted net income, Adjusted effective tax rate, Adjusted diluted earnings per share and Return on invested capital 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 and market conditions; the effectiveness of 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 the Air Liquide Welding business acquisition; 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 political unrest, acts of terror and natural disasters, 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, 2017.

Contact

Amanda Butler
Vice President, Investor Relations & Communications
Tel: 216.383.2534
Email: Amanda_Butler@lincolnelectric.com

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Consolidated Statements of Income

  Three Months Ended December 31, Fav (Unfav) to
Prior Year
  2018 % of Sales 2017 % of Sales $ %
Net sales $743,827  100.0% $747,185  100.0% $(3,358) (0.4%)
Cost of goods sold 493,528  66.3% 508,933  68.1% 15,405  3.0%
Gross profit 250,299  33.7% 238,252  31.9% 12,047  5.1%
Selling, general & administrative expenses 154,437  20.8% 153,405  20.5% (1,032) (0.7%)
Rationalization and asset impairment charges 932  0.1% 6,590  0.9% 5,658  85.9%
Bargain purchase adjustment (gain)     1,935  0.3% 1,935  100.0%
Operating income 94,930  12.8% 76,322  10.2% 18,608  24.4%
Interest expense, net 4,343  0.6% 4,448  0.6% 105  2.4%
Other income (expense) 3,868  0.5% 1,854  0.2% 2,014  108.6%
Income before income taxes 94,455  12.7% 73,728  9.9% 20,727  28.1%
Income taxes 7,676  1.0% 49,543  6.6% 41,867  84.5%
Effective tax rate 8.1%   67.2%   59.1%  
Net income including non-controlling interests 86,779  11.7% 24,185  3.2% 62,594  258.8%
Non-controlling interests in subsidiaries’ earnings (loss) (60)   4    (64) (1,600.0%)
Net income $86,839  11.7% $24,181  3.2% $62,658  259.1%
             
Basic earnings per share $1.36    $0.37    $0.99  267.6%
Diluted earnings per share $1.35    $0.36    $0.99  275.0%
Weighted average shares (basic) 63,808    65,649       
Weighted average shares (diluted) 64,559    66,530       
  Twelve Months Ended December 31, Fav (Unfav) to
Prior Year
  2018 % of Sales 2017 % of Sales $ %
Net sales $3,028,674  100.0% $2,624,431  100.0% $404,243  15.4%
Cost of goods sold 2,000,153  66.0% 1,749,324  66.7% (250,829) (14.3%)
Gross profit 1,028,521  34.0% 875,107  33.3% 153,414  17.5%
Selling, general & administrative expenses 627,697  20.7% 541,225  20.6% (86,472) (16.0%)
Rationalization and asset impairment charges 25,285  0.8% 6,590  0.3% (18,695) (283.7%)
Bargain purchase adjustment (gain)     (49,650) (1.9%) (49,650) (100.0%)
Operating income 375,539  12.4% 376,942  14.4% (1,403) (0.4%)
Interest expense, net 17,565  0.6% 19,432  0.7% 1,867  9.6%
Other income (expense) 10,686  0.4% 8,726  0.3% 1,960  22.5%
Income before income taxes 368,660  12.2% 366,236  14.0% 2,424  0.7%
Income taxes 81,667  2.7% 118,761  4.5% 37,094  31.2%
Effective tax rate 22.2%   32.4%   10.2%  
Net income including non-controlling interests 286,993  9.5% 247,475  9.4% 39,518  16.0%
Non-controlling interests in subsidiaries’ earnings (loss) (73)   (28)   (45) (160.7%)
Net income $287,066  9.5% $247,503  9.4% $39,563  16.0%
             
Basic earnings per share $4.42    $3.76    $0.66  17.6%
Diluted earnings per share $4.37    $3.71    $0.66  17.8%
Weighted average shares (basic) 64,886    65,739       
Weighted average shares (diluted) 65,682    66,643       

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data December 31, 2018 December 31, 2017
Cash and cash equivalents $358,849  $326,701 
Marketable securities   179,125 
Total current assets 1,237,799  1,373,608 
Property, plant and equipment, net 478,801  477,031 
Total assets 2,349,825  2,406,547 
Total current liabilities 538,182  528,742 
Short-term debt (1) 111  2,131 
Long-term debt, less current portion 702,549  704,136 
Total equity 887,592  932,453 
     
Operating Working Capital December 31, 2018 December 31, 2017
Accounts receivable, net $396,885  $395,279 
Inventories 361,829  348,667 
Trade accounts payable 268,600  269,763 
Operating working capital $490,114  $474,183 
     
Average operating working capital to Net sales (2) 16.5% 15.9%
     
Invested Capital December 31, 2018 December 31, 2017
Short-term debt (1) $111  $2,131 
Long-term debt, less current portion 702,549  704,136 
Total debt 702,660  706,267 
Total equity 887,592  932,453 
Invested capital $1,590,252  $1,638,720 
     
Total debt / invested capital 44.2% 43.1%
  1. Includes current portion of long-term debt.
  2. Average operating working capital to Net sales is defined as operating working capital 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 December 31, Twelve Months Ended December 31,
  2018 2017 2018 2017
Operating income as reported $94,930  $76,322  $375,539  $376,942 
Special items (pre-tax):        
Rationalization and asset impairment charges (2) 932  6,590  25,285  6,590 
Acquisition transaction and integration costs (3) 833  3,616  4,498  15,002 
Amortization of step up in value of acquired inventories (3)   2,264    4,578 
Bargain purchase adjustment (gain) (3)   1,935    (49,650)
Adjusted operating income (1) $96,695  $90,727  $405,322  $353,462 
As a percent of total sales 13.0% 12.1% 13.4% 13.5%
         
Net income as reported $86,839  $24,181  $287,066  $247,503 
Special items:        
Rationalization and asset impairment charges (2) 932  6,590  25,285  6,590 
Acquisition transaction and integration costs (3) 833  3,616  4,498  15,002 
Pension settlement charges (4) 1,696  2,867  6,686  8,150 
Amortization of step up in value of acquired inventories (3)   2,264    4,578 
Bargain purchase adjustment (gain) (3)   1,935    (49,650)
Tax effect of Special items (5) (6,764) 26,057  (6,896) 20,536 
Adjusted net income (1) 83,536  67,510  316,639  252,709 
Non-controlling interests in subsidiaries’ earnings (loss) (60) 4  (73) (28)
Interest expense, net 4,343  4,448  17,565  19,432 
Income taxes as reported 7,676  49,543  81,667  118,761 
Tax effect of Special items (5) 6,764  (26,057) 6,896  (20,536)
Adjusted EBIT (1) $102,259  $95,448  $422,694  $370,338 
         
Effective tax rate as reported 8.1% 67.2% 22.2% 32.4%
Net special item tax impact 6.6% (41.4)% (0.3)% (4.4)%
Adjusted effective tax rate (1) 14.7% 25.8% 21.9% 28.0%
         
Diluted earnings per share as reported $1.35  $0.36  $4.37  $3.71 
Special items per share (0.06) 0.65  0.45  0.08 
Adjusted diluted earnings per share (1) $1.29  $1.01  $4.82  $3.79 
         
Weighted average shares (diluted) 64,559  66,530  65,682  66,643 
  1. Adjusted operating income, Adjusted EBIT, Adjusted net income, Adjusted effective tax rate and Adjusted diluted earnings per share 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.
  2. Primarily related to severance, asset impairments and gains or losses on the disposal of assets.
  3. Related to the acquisition of Air Liquide Welding.
  4. Related to lump sum pension payments.
  5. Includes the net tax impact of Special items recorded during the respective periods, including a credit of $4,424 and a net charge of $399 related to the U.S. Tax Act in the three and twelve months ended December 31, 2018, respectively, as well as a charge of $28,616 in the three and twelve month period ended December 31, 2017. 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 December 31,
Return on Invested Capital 2018 2017
Net income as reported $287,066  $247,503 
Rationalization and asset impairment charges 25,285  6,590 
Pension settlement charges 6,686  8,150 
Acquisition transaction and integration costs 4,498  15,002 
Amortization of step up in value of acquired inventories   4,578 
Bargain purchase adjustment (gain)   (49,650)
Tax effect of Special items (3) (6,896) 20,536 
Adjusted net income (1) $316,639  $252,709 
Plus: Interest expense, net of tax of $6,117 and $9,273 in 2018 and 2017, respectively 18,386  14,947 
Less: Interest income, net of tax of $1,732 and $1,833 in 2018 and 2017, respectively 5,206  2,955 
Adjusted net income before tax effected interest $329,819  $264,701 
     
Invested Capital December 31, 2018 December 31, 2017
Short-term debt 111  2,131 
Long-term debt, less current portion 702,549  704,136 
Total debt 702,660  706,267 
Total equity 887,592  932,453 
Invested capital $1,590,252  $1,638,720 
     
Return on invested capital (1)(2) 20.7% 16.2%
  1. Adjusted net income and Return on invested capital 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.
  2. Return on invested capital is defined as rolling 12 months of Adjusted net income before tax-effected interest income and expense divided by invested capital.
  3. Includes the net tax impact of Special items recorded during the respective periods, including the net impact of the U.S. Tax Act of $399 and $28,616 in the twelve months ended December 31, 2018 and 2017, respectively. 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 December 31,
  2018 2017
OPERATING ACTIVITIES:    
Net income $86,839  $24,181 
Non-controlling interests in subsidiaries’ (loss) earnings (60) 4 
Net income including non-controlling interests 86,779  24,185 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment net (gains) charges (4,570) 1,441 
Bargain purchase adjustment   1,935 
Net impact of U.S. Tax Act (4,424) 28,616 
Depreciation and amortization 18,400  17,658 
Equity earnings in affiliates, net (1,607) (121)
Pension expense and settlement charges 354  1,701 
Other non-cash items, net 4,497  5,393 
Changes in operating assets and liabilities, net of effects from acquisitions:    
Decrease in accounts receivable 21,431  7,489 
Decrease in inventories 17,629  41,974 
Increase in trade accounts payable 21,159  26,803 
Net change in other current assets and liabilities (58,649) (70,003)
Net change in other long-term assets and liabilities (1,624) 2,420 
NET CASH PROVIDED BY OPERATING ACTIVITIES 99,375  89,491 
INVESTING ACTIVITIES:    
Capital expenditures (22,500) (22,697)
Acquisition of businesses, net of cash acquired (108,383)  
Proceeds from sale of property, plant and equipment 6,170  307 
Purchase of marketable securities   (60,031)
Proceeds from marketable securities 99,281  60,190 
Other investing activities (2,000)  
NET CASH USED BY INVESTING ACTIVITIES (27,432) (22,231)
FINANCING ACTIVITIES:    
Net change in borrowings (296) 109 
Proceeds from exercise of stock options 242  2,294 
Purchase of shares for treasury (80,173) (20,152)
Cash dividends paid to shareholders (25,384) (23,369)
Other financing activities   9 
NET CASH USED BY FINANCING ACTIVITIES (105,611) (41,109)
Effect of exchange rate changes on Cash and cash equivalents (5,683) 1,097 
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (39,351) 27,248 
Cash and cash equivalents at beginning of period 398,200  299,453 
Cash and cash equivalents at end of period $358,849  $326,701 
Cash dividends paid per share $0.39  $0.35 


Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Condensed Consolidated Statements of Cash Flows

  Twelve Months Ended December 31,
  2018 2017
OPERATING ACTIVITIES:    
Net income $287,066  $247,503 
Non-controlling interests in subsidiaries’ loss (73) (28)
Net income including non-controlling interests 286,993  247,475 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment net (gains) charges (5,978) 1,441 
Bargain purchase gain   (49,650)
Net impact of U.S. Tax Act 399  28,616 
Depreciation and amortization 72,346  68,115 
Equity earnings in affiliates, net (3,034) (337)
Pension expense and settlement charges 3,068  2,517 
Other non-cash items, net 9,042  18,158 
Changes in operating assets and liabilities, net of effects from acquisitions:    
Increase in accounts receivable (4,061) (16,811)
(Increase) decrease in inventories (23,904) 19,448 
Increase in trade accounts payable 3,636  17,871 
Net change in other current assets and liabilities (12,333) (8,156)
Net change in other long-term assets and liabilities 2,978  6,158 
NET CASH PROVIDED BY OPERATING ACTIVITIES 329,152  334,845 
INVESTING ACTIVITIES:    
Capital expenditures (71,246) (61,656)
Acquisition of businesses, net of cash acquired (101,792) (72,468)
Proceeds from sale of property, plant and equipment 16,755  2,301 
Purchase of marketable securities (268,335) (205,584)
Proceeds from marketable securities 447,459  65,380 
Other investing activities (2,000)  
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES 20,841  (272,027)
FINANCING ACTIVITIES:    
Net change in borrowings (942) (496)
Proceeds from exercise of stock options 4,690  16,627 
Purchase of shares for treasury (201,650) (43,164)
Cash dividends paid to shareholders (102,058) (92,452)
Other financing activities (2,170) (15,552)
NET CASH USED BY FINANCING ACTIVITIES (302,130) (135,037)
Effect of exchange rate changes on Cash and cash equivalents (15,715) 19,741 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 32,148  (52,478)
Cash and cash equivalents at beginning of period 326,701  379,179 
Cash and cash equivalents at end of period $358,849  $326,701 
Cash dividends paid per share $1.56  $1.40 


Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)

  Americas
Welding
 International
Welding
 The Harris
Products Group
 Corporate /
Eliminations
 Consolidated
Three months ended
  December 31, 2018
          
Net sales $455,217  $219,456  $69,154  $  $743,827 
Inter-segment sales 29,265  4,907  1,522  (35,694)  
Total $484,482  $224,363  $70,676  $(35,694) $743,827 
Net income         $86,839 
As a percent of total sales         11.7%
EBIT (1) $84,198  $11,371  $8,506  $(5,277) $98,798 
As a percent of total sales 17.4% 5.1% 12.0%   13.3%
Special items charges (gains) (3) 1,696  932    833  3,461 
Adjusted EBIT (2) $85,894  $12,303  $8,506  $(4,444) $102,259 
As a percent of total sales 17.7% 5.5% 12.0%   13.7%
Three months ended
  December 31, 2017
          
Net sales $423,019  $256,021  $68,145  $  $747,185 
Inter-segment sales 22,002  3,646  1,427  (27,075)  
Total $445,021  $259,667  $69,572  $(27,075) $747,185 
Net income         $24,181 
As a percent of total sales         3.2%
EBIT (1) $70,590  $4,246  $8,951  $(5,611) $78,176 
As a percent of total sales 15.9% 1.6% 12.9%   10.5%
Special items charges (gains) (4) 3,959  7,762    5,551  17,272 
Adjusted EBIT (2) $74,549  $12,008  $8,951  $(60) $95,448 
As a percent of total sales 16.8% 4.6% 12.9%   12.8%
  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 2018 reflect pension settlement charges of $1,696 in Americas Welding, rationalization and asset impairment charges of $932 in International Welding and acquisition transaction and integration costs of $833 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
  4. Special items in 2017 reflect pension settlement charges of $2,867 in Americas Welding, rationalization and asset impairment charges of $6,590 in Americas Welding and International Welding, amortization of step up in value of acquired inventories of $2,264 in International Welding and acquisition transaction and integration costs of $3,616 and an adjustment to the bargain purchase gain of $1,935 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.


Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)

  Americas
Welding
 International
Welding
 The Harris
Products Group
 Corporate /
Eliminations
 Consolidated
Twelve months ended
  December 31, 2018
          
Net sales $1,806,514  $919,771  $302,389  $  $3,028,674 
Inter-segment sales 118,936  18,576  6,969  (144,481)  
Total $1,925,450  $938,347  $309,358  $(144,481) $3,028,674 
Net income         $287,066 
As a percent of total sales         9.5%
EBIT (1) $334,058  $28,988  $36,564  $(13,385) $386,225 
As a percent of total sales 17.3% 3.1% 11.8%   12.8%
Special items charges (gains) (3) 6,686  25,285    4,498  36,469 
Adjusted EBIT (2) $340,744  $54,273  $36,564  $(8,887) $422,694 
As a percent of total sales 17.7% 5.8% 11.8%   14.0%
Twelve months ended
  December 31, 2017
          
Net sales $1,609,779  $724,024  $290,628  $  $2,624,431 
Inter-segment sales 97,382  18,860  8,190  (124,432)  
Total $1,707,161  $742,884  $298,818  $(124,432) $2,624,431 
Net income         $247,503 
As a percent of total sales         9.4%
EBIT (1) $282,624  $31,645  $36,442  $34,957  $385,668 
As a percent of total sales 16.6% 4.3% 12.2%   14.7%
Special items charges (gains) (4) 9,242  10,076    (34,648) (15,330)
Adjusted EBIT (2) $291,866  $41,721  $36,442  $309  $370,338 
As a percent of total sales 17.1% 5.6% 12.2%   14.1%
  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 2018 reflect pension settlement charges of $6,686 in Americas Welding, rationalization and asset impairment charges of $25,285 in International Welding and acquisition transaction and integration costs of $4,498 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
  4. Special items in 2017 reflect pension settlement charges of $8,150 in Americas Welding, rationalization and asset impairment charges of $6,590 in Americas Welding and International Welding, amortization of step up in value of acquired inventories of $4,578 in International Welding and acquisition transaction and integration costs of $15,002 and a bargain purchase gain of $49,650 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.


Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)

Three Months Ended December 31st Change in Net Sales by Segment
       
    Change in Net Sales due to:  
  Net Sales
2017
 Volume Acquisitions Price Foreign
Exchange
 Net Sales
2018
Operating Segments            
Americas Welding $423,019  $(411) $2,831  $35,270  $(5,492) $455,217 
International Welding 256,021  (35,198)   9,626  (10,993) 219,456 
The Harris Products Group 68,145  3,120    (1,053) (1,058) 69,154 
Consolidated $747,185  $(32,489) $2,831  $43,843  $(17,543) $743,827 
             
% Change            
Americas Welding   (0.1%) 0.7% 8.3% (1.3%) 7.6%
International Welding   (13.7%)   3.8% (4.3%) (14.3%)
The Harris Products Group   4.6%   (1.5%) (1.6%) 1.5%
Consolidated   (4.3%) 0.4% 5.9% (2.3%) (0.4%)
             
Twelve Months Ended December 31st Change in Net Sales by Segment
       
    Change in Net Sales due to:  
  Net Sales
2017
 Volume Acquisitions Price Foreign
Exchange
 Net Sales
2018
Operating Segments            
Americas Welding $1,609,779  $82,258  $11,644  $111,038  $(8,205) $1,806,514 
International Welding 724,024  (66,963) 227,598  34,777  335  919,771 
The Harris Products Group $290,628  12,497    378  (1,114) 302,389 
Consolidated $2,624,431  $27,792  $239,242  $146,193  $(8,984) $3,028,674 
             
% Change            
Americas Welding    5.1% 0.7% 6.9% (0.5%) 12.2%
International Welding   (9.2%) 31.4% 4.8%   27.0%
The Harris Products Group   4.3%   0.1% (0.4%) 4.0%
Consolidated   1.1% 9.1% 5.6% (0.3%) 15.4%