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CST: 21/11/2019 05:41:22   

Lincoln Electric Reports Third Quarter 2019 Results

21 Days ago


Third Quarter 2019 Highlights
  •     Q3 EPS increases 9.3% to $1.17, Adjusted EPS decreases 9.9% to $1.09
  •     ROIC increases 170 basis points to 21.0%
  •     Cash flow from operations increases 21% to $129 million and achieved 165% cash conversion (1)
  •     $90 million returned to shareholders through dividends and share repurchases
 

(1)   Cash conversion is defined as Net cash provided by operating activities less Capital expenditures divided by Adjusted net income.

CLEVELAND, Oct. 30, 2019 (GLOBE NEWSWIRE) --  Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2019 net income of $72.5 million, or diluted earnings per share (EPS) of $1.17, which includes special item after-tax net benefits of $4.8 million, or $0.08 EPS. This compares with prior year net income of $70.5 million, or $1.07 EPS, which included special item after-tax charges of $8.9 million, or $0.14 EPS.  Excluding these items, third quarter 2019 adjusted net income was $67.7 million, or $1.09 EPS, as compared with $79.4 million, or $1.21 EPS in the prior year period.  The effective tax rate was 21.1% in the third quarter 2019 as compared with 26.3% in the prior year period.  Excluding special items, the adjusted effective tax rate was 22.4%, which compares to 23.3% in the comparable 2018 period.

Third quarter 2019 sales decreased 0.9% to $730.8 million from a 4.7% decrease in organic sales and 1.6% unfavorable foreign exchange, partially offset by a 5.4% benefit from acquisitions.  Operating income for the third quarter 2019 was $88.5 million, or 12.1% of sales.  This compares with operating income of $100.8 million, or 13.7% of sales, in the prior year period.  On an adjusted basis, operating income was $91.6 million, or 12.5% of sales, as compared with $104.4 million, or 14.2% of sales, in the prior year period.

“We continued to achieve solid returns, cash flow generation and cash conversion despite slowing industrial sector demand and capital spending in the quarter,” stated Christopher L. Mapes, Chairman, President & CEO.  “We are addressing this challenging portion of the cycle through additional cost management actions while continuing to invest for future growth.”

Nine Months 2019 Summary

Net income for the nine months ended September 30, 2019 was $229.4 million, or $3.64 EPS.  This compares with $200.2 million, or $3.03 EPS, in the comparable 2018 period.  Reported EPS includes special item after-tax net benefits of $5.8 million or $0.09 EPS, as compared with special item after-tax charges of $32.9 million, or $0.50 EPS in the prior year period.  Excluding these items, adjusted net income for the nine months ended September 30, 2019 was $223.6 million, or $3.55 EPS, compared with $233.1 million, or $3.53 EPS, in the comparable 2018 period.  The effective tax rate was 20.4% for the nine months ended September 30, 2019 as compared with 27.0% in the prior year period.  Excluding special items, the adjusted effective tax rate was 22.4%, which compares to 24.1% in the comparable 2018 period.

Sales decreased 0.8% to $2.3 billion in the nine months ended September 30, 2019 from a 2.4% decrease in organic sales, 2.1% unfavorable foreign exchange, partially offset by a 3.7% benefit from acquisitions.  Operating income for the nine months ended September 30, 2019 was $288.2 million, or 12.7% of sales. This compares with operating income of $280.6 million, or 12.3% of sales, in the comparable 2018 period.  On an adjusted basis, operating income was $296.3 million, or 13.1% of sales, as compared with $308.6 million, or 13.5% of sales, in the comparable 2018 period.

Dividend

The Company's Board of Directors declared a 4.3% increase in the quarterly cash dividend, from $0.47 per share to $0.49 per share, or $1.96 per share on an annual basis.  The declared quarterly cash dividend of $0.49 per share is payable January 15, 2020 to shareholders of record as of December 31, 2019.

Webcast Information

A conference call to discuss third quarter 2019 financial results will be webcast live today, October 30, 2019, at 10:00 a.m., Eastern Time.  This webcast is accessible at https://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 5875799.  Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the third quarter 2019 can also be obtained at https://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 https://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Organic sales 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 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 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, 2018.

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 September 30,   Fav (Unfav) to
Prior Year
    2019   % of Sales   2018   % of Sales   $   %
Net sales   $ 730,783     100.0 %   $ 737,099     100.0 %   $ (6,316 )   (0.9 %)
Cost of goods sold   492,432     67.4 %   485,547     65.9 %   (6,885 )   (1.4 %)
Gross profit   238,351     32.6 %   251,552     34.1 %   (13,201 )   (5.2 %)
Selling, general & administrative expenses   148,312     20.3 %   148,129     20.1 %   (183 )   (0.1 %)
Rationalization and asset impairment charges   1,495     0.2 %   2,636     0.4 %   1,141     43.3 %
Operating income   88,544     12.1 %   100,787     13.7 %   (12,243 )   (12.1 %)
Interest expense, net   6,400     0.9 %   3,969     0.5 %   (2,431 )   (61.2 %)
Other income (expense)   9,653     1.3 %   (1,074 )   0.1 %   10,727     998.8 %
Income before income taxes   91,797     12.6 %   95,744     13.0 %   (3,947 )   (4.1 %)
Income taxes   19,340     2.6 %   25,209     3.4 %   5,869     23.3 %
Effective tax rate   21.1 %       26.3 %       5.2 %    
Net income including non-controlling interests   72,457     9.9 %   70,535     9.6 %   1,922     2.7 %
Non-controlling interests in subsidiaries’ loss   (4 )       (4 )            
Net income   $ 72,461     9.9 %   $ 70,539     9.6 %   $ 1,922     2.7 %
                         
Basic earnings per share   $ 1.18         $ 1.09         $ 0.09     8.3 %
Diluted earnings per share   $ 1.17         $ 1.07         $ 0.10     9.3 %
Weighted average shares (basic)   61,380         64,821              
Weighted average shares (diluted)   62,061         65,652              
    Nine Months Ended September 30,   Fav (Unfav) to
Prior Year
    2019   % of Sales   2018   % of Sales   $   %
Net sales   $ 2,266,965     100.0 %   $ 2,284,847     100.0 %   $ (17,882 )   (0.8 %)
Cost of goods sold   1,500,312     66.2 %   1,506,625     65.9 %   6,313     0.4 %
Gross profit   766,653     33.8 %   778,222     34.1 %   (11,569 )   (1.5 %)
Selling, general & administrative expenses   472,108     20.8 %   473,260     20.7 %   1,152     0.2 %
Rationalization and asset impairment charges   6,337     0.3 %   24,353     1.1 %   18,016     74.0 %
Operating income   288,208     12.7 %   280,609     12.3 %   7,599     2.7 %
Interest expense, net   17,621     0.8 %   13,222     0.6 %   (4,399 )   (33.3 %)
Other income (expense)   17,612     0.8 %   6,818     0.3 %   10,794     158.3 %
Income before income taxes   288,199     12.7 %   274,205     12.0 %   13,994     5.1 %
Income taxes   58,832     2.6 %   73,991     3.2 %   15,159     20.5 %
Effective tax rate   20.4 %       27.0 %       6.6 %    
Net income including non-controlling interests   229,367     10.1 %   200,214     8.8 %   29,153     14.6 %
Non-controlling interests in subsidiaries’ loss   (26 )       (13 )       (13 )   (100.0 %)
Net income   $ 229,393     10.1 %   $ 200,227     8.8 %   $ 29,166     14.6 %
                         
Basic earnings per share   $ 3.68         $ 3.07         $ 0.61     19.9 %
Diluted earnings per share   $ 3.64         $ 3.03         $ 0.61     20.1 %
Weighted average shares (basic)   62,282         65,245              
Weighted average shares (diluted)   62,972         66,055              


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

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data   September 30, 2019   December 31, 2018
Cash and cash equivalents   $ 156,612     $ 358,849  
Total current assets   1,082,434     1,237,799  
Property, plant and equipment, net   523,229     478,801  
Total assets   2,361,160     2,349,825  
Total current liabilities   572,437     538,182  
Short-term debt (1)   13,293     111  
Long-term debt, less current portion   713,884     702,549  
Total equity   813,808     887,592  
         
Operating Working Capital   September 30, 2019   December 31, 2018
Accounts receivable, net   $ 395,355     $ 396,885  
Inventories   411,120     361,829  
Trade accounts payable   243,837     268,600  
Operating working capital   $ 562,638     $ 490,114  
         
Average operating working capital to Net sales (2)   19.2 %   16.5 %
         
Invested Capital   September 30, 2019   December 31, 2018
Short-term debt (1)   $ 13,293     $ 111  
Long-term debt, less current portion   713,884     702,549  
Total debt   727,177     702,660  
Total equity   813,808     887,592  
Invested capital   $ 1,540,985     $ 1,590,252  
         
Total debt / invested capital   47.2 %   44.2 %
  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 September 30,   Nine Months Ended September 30,
    2019   2018   2019   2018
Operating income as reported   $ 88,544     $ 100,787     $ 288,208     $ 280,609  
Special items (pre-tax):                
Rationalization and asset impairment charges (2)   1,495     2,636     6,337     24,353  
Acquisition transaction and integration costs (3)       970     1,804     3,665  
Amortization of step up in value of acquired inventories (4)   1,609         3,008      
Gains on asset disposals (5)           (3,045 )    
Adjusted operating income (1)   $ 91,648     $ 104,393     $ 296,312     $ 308,627  
As a percent of total sales   12.5 %   14.2 %   13.1 %   13.5 %
                 
Net income as reported   $ 72,461     $ 70,539     $ 229,393     $ 200,227  
Special items:                
Rationalization and asset impairment charges (2)   1,495     2,636     6,337     24,353  
Acquisition transaction and integration costs (3)       970     1,804     3,665  
Pension settlement charges (6)       4,232         4,990  
Amortization of step up in value of acquired inventories (4)   1,609         3,008      
Gains on asset disposals (5)           (3,554 )    
Gain on change in control (7)   (7,601 )       (7,601 )    
Tax effect of Special items (8)   (255 )   1,033     (5,819 )   (132 )
Adjusted net income (1)   67,709     79,410     223,568     233,103  
Non-controlling interests in subsidiaries’ loss   (4 )   (4 )   (26 )   (13 )
Interest expense, net   6,400     3,969     17,621     13,222  
Income taxes as reported   19,340     25,209     58,832     73,991  
Tax effect of Special items (8)   255     (1,033 )   5,819     132  
Adjusted EBIT (1)   $ 93,700     $ 107,551     $ 305,814     $ 320,435  
                 
Effective tax rate as reported   21.1 %   26.3 %   20.4 %   27.0 %
Net special item tax impact   1.3 %   (3.0 %)   2.0 %   (2.9 %)
Adjusted effective tax rate (1)   22.4 %   23.3 %   22.4 %   24.1 %
                 
Diluted earnings per share as reported   $ 1.17     $ 1.07     $ 3.64     $ 3.03  
Special items per share   (0.08 )   0.14     (0.09 )   0.50  
Adjusted diluted earnings per share (1)   $ 1.09     $ 1.21     $ 3.55     $ 3.53  
                 
Weighted average shares (diluted)   62,061     65,652     62,972     66,055  
  1. Adjusted operating income, Adjusted net income, Adjusted EBIT, 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 and are included in Selling, general & administrative expenses.
  4. Related to the acquisitions of Baker Industries, Inc. and Kaynak Tekniği Sanayi ve Ticaret A.Ş. ("Askaynak") and are included in Cost of goods sold.
  5. Primarily included in Cost of goods sold.
  6. Related to lump sum pension payments and are included in Other income (expense).
  7. Related to the acquisition of Askaynak and is included in Other income (expense).
  8. Includes the net tax impact of Special items recorded during the respective periods, including tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the nine months ended September 30, 2019.  The prior year includes an adjustment to taxes on unremitted foreign earnings related to the U.S. Tax Act of $2,323 and $4,823 in the three and nine months ended September 30, 2018, 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)

Non-GAAP Financial Measures

    Twelve Months Ended September 30,
Return on Invested Capital   2019   2018
Net income as reported   $ 316,232     $ 224,408  
Rationalization and asset impairment charges   7,269     30,943  
Acquisition transaction and integration costs   2,637     7,281  
Pension settlement charges   1,696     7,857  
Amortization of step up in value of acquired inventories   3,008     2,264  
Gains on asset disposals   (3,554 )    
Bargain purchase adjustment       1,935  
Gain on change in control   (7,601 )    
Tax effect of Special items (3)   (12,583 )   25,925  
Adjusted net income (1)   $ 307,104     $ 300,613  
Plus: Interest expense, net of tax of $6,410 and $6,087 in 2019 and 2018, respectively   19,265     18,295  
Less: Interest income, net of tax of $926 and $1,676 in 2019 and 2018, respectively   2,785     5,036  
Adjusted net income before tax-effected interest   $ 323,584     $ 313,872  
         
Invested Capital   September 30, 2019   September 30, 2018
Short-term debt   $ 13,293     $ 794  
Long-term debt, less current portion   713,884     698,468  
Total debt   727,177     699,262  
Total equity   813,808     927,868  
Invested capital   $ 1,540,985     $ 1,627,130  
         
Return on invested capital (1)(2)   21.0 %   19.3 %
  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 tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended September 30, 2019 and net charges of $33,439 related to the U.S. Tax Act in the twelve months ended September 30, 2018.
    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,
    2019   2018
OPERATING ACTIVITIES:        
Net income   $ 72,461     $ 70,539  
Non-controlling interests in subsidiaries’ loss   (4 )   (4 )
Net income including non-controlling interests   72,457     70,535  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net gains       (2,034 )
Depreciation and amortization   21,148     17,623  
Equity earnings in affiliates, net   (49 )   (50 )
Gain on change in control   (7,601 )    
Other non-cash items, net   3,566     5,434  
Changes in operating assets and liabilities, net of effects from acquisitions:        
Decrease in accounts receivable   45,374     14,415  
Increase in inventories   (8,709 )   (13,634 )
Decrease in trade accounts payable   (18,733 )   (22,384 )
Net change in other current assets and liabilities   20,393     33,932  
Net change in other long-term assets and liabilities   835     2,382  
NET CASH PROVIDED BY OPERATING ACTIVITIES   128,681     106,219  
         
INVESTING ACTIVITIES:        
Capital expenditures   (17,038 )   (17,363 )
Acquisition of businesses, net of cash acquired   (28,892 )    
Proceeds from sale of property, plant and equipment   779     10,358  
Purchase of marketable securities       (49,668 )
Proceeds from marketable securities       89,445  
NET CASH (USED BY) PROVIDED BY INVESTING ACTIVITIES   (45,151 )   32,772  
         
FINANCING ACTIVITIES:        
Net change in borrowings   (27,544 )   (856 )
Proceeds from exercise of stock options   5,250     1,849  
Purchase of shares for treasury   (61,028 )   (71,245 )
Cash dividends paid to shareholders   (29,061 )   (25,424 )
Other financing activities       (2,170 )
NET CASH USED BY FINANCING ACTIVITIES   (112,383 )   (97,846 )
         
Effect of exchange rate changes on Cash and cash equivalents   (4,396 )   (39 )
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (33,249 )   41,106  
Cash and cash equivalents at beginning of period   189,861     357,094  
Cash and cash equivalents at end of period   $ 156,612     $ 398,200  
         
Cash dividends paid per share   $ 0.47     $ 0.39  


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

Condensed Consolidated Statements of Cash Flows

    Nine Months Ended September 30,
    2019   2018
OPERATING ACTIVITIES:        
Net income   $ 229,393     $ 200,227  
Non-controlling interests in subsidiaries’ loss   (26 )   (13 )
Net income including non-controlling interests   229,367     200,214  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net charges (gains)   1,069     (1,408 )
Depreciation and amortization   60,400     53,946  
Equity earnings in affiliates, net   (1,266 )   (1,427 )
Gain on change in control   (7,601 )    
Other non-cash items, net   9,285     12,082  
Changes in operating assets and liabilities, net of effects from acquisitions:        
Decrease (increase) in accounts receivable   24,103     (25,492 )
Increase in inventories   (36,476 )   (41,533 )
Decrease in trade accounts payable   (34,202 )   (17,523 )
Net change in other current assets and liabilities   34,340     46,316  
Net change in other long-term assets and liabilities   1,647     4,602  
NET CASH PROVIDED BY OPERATING ACTIVITIES   280,666     229,777  
         
INVESTING ACTIVITIES:        
Capital expenditures   (53,551 )   (48,746 )
Acquisition of businesses, net of cash acquired   (136,735 )   6,591  
Proceeds from sale of property, plant and equipment   9,491     10,585  
Purchase of marketable securities       (268,335 )
Proceeds from marketable securities       348,178  
Other investing activities   2,000      
NET CASH (USED BY) PROVIDED BY INVESTING ACTIVITIES   (178,795 )   48,273  
         
FINANCING ACTIVITIES:        
Net change in borrowings   2,433     (646 )
Proceeds from exercise of stock options   6,210     4,448  
Purchase of shares for treasury   (221,942 )   (121,477 )
Cash dividends paid to shareholders   (89,162 )   (76,674 )
Other financing activities       (2,170 )
NET CASH USED BY FINANCING ACTIVITIES   (302,461 )   (196,519 )
         
Effect of exchange rate changes on Cash and cash equivalents   (1,647 )   (10,032 )
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (202,237 )   71,499  
Cash and cash equivalents at beginning of period   358,849     326,701  
Cash and cash equivalents at end of period   $ 156,612     $ 398,200  
         
Cash dividends paid per share   $ 1.41     $ 1.17  

Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)

    Americas
Welding
  International
Welding
  The Harris
Products Group
  Corporate /
Eliminations
  Consolidated
Three months ended September 30, 2019                
Net sales   $ 443,521     $ 205,378     $ 81,884     $     $ 730,783  
Inter-segment sales   31,101     4,441     1,857     (37,399 )    
Total   $ 474,622     $ 209,819     $ 83,741     $ (37,399 )   $ 730,783  
                     
Net income                   $ 72,461  
As a percent of total sales                   9.9 %
                     
EBIT (1)   $ 74,110     $ 14,681     $ 11,038     $ (1,632 )   $ 98,197  
As a percent of total sales   15.6 %   7.0 %   13.2 %       13.4 %
Special items charges (gains) (3)       (4,497 )           (4,497 )
Adjusted EBIT (2)   $ 74,110     $ 10,184     $ 11,038     $ (1,632 )   $ 93,700  
As a percent of total sales   15.6 %   4.9 %   13.2 %       12.8 %
                     
Three months ended September 30, 2018                
Net sales   $ 454,010     $ 209,622     $ 73,467     $     $ 737,099  
Inter-segment sales   31,845     3,663     1,537     (37,045 )    
Total   $ 485,855     $ 213,285     $ 75,004     $ (37,045 )   $ 737,099  
                     
Net income                   $ 70,539  
As a percent of total sales                   9.6 %
                     
EBIT (1)   $ 85,021     $ 8,085     $ 8,676     $ (2,069 )   $ 99,713  
As a percent of total sales   17.5 %   3.8 %   11.6 %       13.5 %
Special items charges (gains) (4)   4,232     2,636         970     7,838  
Adjusted EBIT (2)   $ 89,253     $ 10,721     $ 8,676     $ (1,099 )   $ 107,551  
As a percent of total sales   18.4 %   5.0 %   11.6 %       14.6 %
  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 2019 reflect Rationalization and asset impairment charges of $1,495, amortization of step up in value of acquired inventories of $1,609 and a gain on change in control of $7,601 related to the acquisition of Askaynak in International Welding.
  4. Special items in 2018 reflect pension settlement charges of $4,232 in Americas Welding, rationalization and asset impairment charges of $2,636 in International Welding and acquisition transaction and integration costs of $970 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
Nine months ended September 30, 2019                
Net sales   $ 1,377,847     $ 635,770     $ 253,348     $     $ 2,266,965  
Inter-segment sales   95,300     12,838     5,837     (113,975 )    
Total   $ 1,473,147     $ 648,608     $ 259,185     $ (113,975 )   $ 2,266,965  
                     
Net income                   $ 229,393  
As a percent of total sales                   10.1 %
                     
EBIT (1)   $ 237,598     $ 43,624     $ 35,045     $ (10,447 )   $ 305,820  
As a percent of total sales   16.1 %   6.7 %   13.5 %       13.5 %
Special items charges (gains) (3)   3,115     (4,925 )       1,804     (6 )
Adjusted EBIT (2)   $ 240,713     $ 38,699     $ 35,045     $ (8,643 )   $ 305,814  
As a percent of total sales   16.3 %   6.0 %   13.5 %       13.5 %
                     
Nine months ended September 30, 2018                
Net sales   $ 1,351,297     $ 700,315     $ 233,235     $     $ 2,284,847  
Inter-segment sales   89,671     13,669     5,447     (108,787 )    
Total   $ 1,440,968     $ 713,984     $ 238,682     $ (108,787 )   $ 2,284,847  
                     
Net income                   $ 200,227  
As a percent of total sales                   8.8 %
                     
EBIT (1)   $ 249,860     $ 17,617     $ 28,058     $ (8,108 )   $ 287,427  
As a percent of total sales   17.3 %   2.5 %   11.8 %       12.6 %
Special items charges (gains) (4)   4,990     24,353         3,665     33,008  
Adjusted EBIT (2)   $ 254,850     $ 41,970     $ 28,058     $ (4,443 )   $ 320,435  
As a percent of total sales   17.7 %   5.9 %   11.8 %       14.0 %
  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 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding and $4,621 in International Welding, 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.
  4. Special items in 2018 reflect pension settlement charges of $4,990 in Americas Welding, rationalization and asset impairment charges of $24,353 in International Welding and acquisition transaction and integration costs of $3,665 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 September 30th Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2018
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2019
Operating Segments                        
Americas Welding   $ 454,010     $ (20,605 )   $ 17,380     $ (5,603 )   $ (1,661 )   $ 443,521  
International Welding   209,622     (12,966 )   17,413     607     (9,298 )   205,378  
The Harris Products Group   73,467     3,429     4,766     761     (539 )   81,884  
Consolidated   $ 737,099     $ (30,142 )   $ 39,559     $ (4,235 )   $ (11,498 )   $ 730,783  
                         
% Change                        
Americas Welding       (4.5 %)   3.8 %   (1.2 %)   (0.4 %)   (2.3 %)
International Welding       (6.2 %)   8.3 %   0.3 %   (4.4 %)   (2.0 %)
The Harris Products Group       4.7 %   6.5 %   1.0 %   (0.7 %)   11.5 %
Consolidated       (4.1 %)   5.4 %   (0.6 %)   (1.6 %)   (0.9 %)
                         
Nine Months Ended September 30th Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2018
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2019
Operating Segments                        
Americas Welding   $ 1,351,297     $ (49,756 )   $ 51,612     $ 33,424     $ (8,730 )   $ 1,377,847  
International Welding   700,315     (54,433 )   17,413     9,919     (37,444 )   635,770  
The Harris Products Group   233,235     5,973     16,196     576     (2,632 )   253,348  
Consolidated   $ 2,284,847     $ (98,216 )   $ 85,221     $ 43,919     $ (48,806 )   $ 2,266,965  
                         
% Change                        
Americas Welding         (3.7 %)   3.8 %   2.5 %   (0.6 %)   2.0 %
International Welding       (7.8 %)   2.5 %   1.4 %   (5.3 %)   (9.2 %)
The Harris Products Group       2.6 %   6.9 %   0.2 %   (1.1 %)   8.6 %
Consolidated       (4.3 %)   3.7 %   1.9 %   (2.1 %)   (0.8 %)
                         

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