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Lincoln Electric Reports Third Quarter 2023 Results
Source: Nasdaq GlobeNewswire / 27 Oct 2023 07:30:01 America/New_York
Third Quarter 2023 Highlights
- Net sales increase 10.5% to record $1,033 million
- Operating income margin of 16.6%; Record adjusted operating income margin of 17.7%
- Record EPS of $2.22; Record adjusted EPS of $2.40
- Cash flows from operations increase 71% to record $223 million with 141% cash conversion(1)
- Returned $82 million to shareholders through dividends and share repurchases
CLEVELAND, Oct. 27, 2023 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported third quarter 2023 net income of $129.3 million, or diluted earnings per share (EPS) of $2.22, which includes special item after-tax net charges of $10.1 million, or $0.18 EPS. This compares with prior year period net income of $109.2 million, or $1.87 EPS, which included special item after-tax net charges of $10.3 million. Excluding special items, third quarter 2023 adjusted net income was $139.5 million, or $2.40 adjusted EPS. This compares with adjusted net income of $119.6 million, or $2.04 adjusted EPS, in the prior year period.
Third quarter 2023 sales increased 10.5% to $1,033.2 million reflecting a 0.4% increase in organic sales, an 8.8% benefit from acquisitions and 1.2% favorable foreign exchange. Operating income for the third quarter 2023 was $171.4 million, or 16.6% of sales. This compares with operating income of $142.1 million, or 15.2% of sales, in the prior year period. Excluding special items, adjusted operating income was $183.4 million, or 17.7% of sales, as compared with $153.2 million, or 16.4% of sales, in the prior year period.
“I am pleased to report another quarter of record sales, profit, earnings, and cash flow performance,” commented Christopher L. Mapes, Chairman, President and Chief Executive Officer. "Our results reflect our commitment to putting customers first, delivering innovative solutions, maintaining effective price/cost management, and successfully executing our Higher Standard Strategy initiatives.” Mapes continued, “Our strong third quarter sales performance reflects acceleration from our automation acquisitions and low-to-mid single digit percent volume growth in our welding segments when normalizing third quarter shipping days to prior year. Given the resilience of key end markets, strong October order rates, and a high backlog of fourth quarter automation shipments, we expect to maintain strong sales performance through year-end,” Mapes concluded.
Nine Months 2023 Summary
Net income for the nine months ended September 30, 2023 was $388.6 million, or $6.67 EPS, which includes special item after-tax net charges of $17.3 million, or $0.30 EPS. This compares with prior period net income of $363.1 million, or $6.17 EPS, which included special item after-tax net charges of $9.4 million, or $0.16 EPS. Excluding special items, adjusted net income for the nine months ended September 30, 2023 increased 9.0% to $405.9 million, or $6.97 EPS, compared with $372.4 million, or $6.33 EPS, in the prior year period.
Sales increased 10.7% to $3,133.1 million in the nine months ended September 30, 2023 reflecting a 4.5% increase in organic sales and a 6.5% benefit from acquisitions, partially offset by 0.3% unfavorable foreign exchange. Operating income for the nine months ended September 30, 2023 was $513.8 million, or 16.4% of sales. This compares with operating income of $470.8 million, or 16.6% of sales, in the prior year period. Excluding special items, adjusted operating income was $536.7 million, or 17.1% of sales, as compared with $484.4 million, or 17.1% of sales, in the prior year period.
Dividend
The Company’s Board of Directors declared an 11% increase in the quarterly cash dividend, from $0.64 per share to $0.71 per share, or $2.84 per share on an annual basis. The declared quarterly cash dividend of $0.71 per share is payable January 12, 2024 to shareholders of record as of December 31, 2023.
(1) Cash conversion is defined as net cash provided by operating activities less capital expenditures divided by adjusted net income.
Webcast Information
A conference call to discuss third quarter 2023 financial results will be webcast live today, October 27, 2023, at 10:00 a.m., Eastern Time. Those interested in participating via webcast in listen-only mode can access the event here or on the Company's Investor Relations home page at https://ir.lincolnelectric.com. For participants who would like to participate via telephone, please register here to receive the dial-in number along with a unique PIN number that is required to access the call. A replay of the earnings call will be available via webcast on the Company's website.
About Lincoln Electric
Lincoln Electric is the world leader in the engineering, design, and manufacturing of advanced arc welding solutions, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment, and has a leading global position in brazing and soldering alloys. Lincoln is recognized as the Welding Expert™ for its leading materials science, software development, automation engineering, and application expertise, which advance customers’ fabrication capabilities to help them build a better world. Headquartered in Cleveland, Ohio, Lincoln has 71 manufacturing locations in 20 countries and a worldwide network of distributors and sales offices serving customers in over 160 countries. For more information about Lincoln Electric and its products and services, visit the Company’s website at https://www.lincolnelectric.com.
Non-GAAP Information
Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate, adjusted diluted earnings per share (“adjusted EPS”), Organic sales, Cash conversion, adjusted net operating profit after taxes and adjusted return on invested capital (“adjusted ROIC”) are non-GAAP financial measures. Management uses non-GAAP measures to assess the Company's operating performance by excluding certain disclosed special items that management believes are not representative of the Company's core business. Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company's operational performance against other companies in its industry more meaningfully. Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly. Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently.
Forward-Looking Statements
The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic, financial and market conditions; the effectiveness of commercial and operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as the impact of the Russia-Ukraine conflict, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)Consolidated Statements of Income Fav (Unfav) to Three Months Ended September 30, Prior Year 2023 % of Sales 2022 % of Sales $ % Net sales $ 1,033,214 100.0 % $ 935,240 100.0 % $ 97,974 10.5 % Cost of goods sold 667,584 64.6 % 625,722 66.9 % (41,862 ) (6.7 ) % Gross profit 365,630 35.4 % 309,518 33.1 % 56,112 18.1 % Selling, general & administrative expenses 187,115 18.1 % 159,045 17.0 % (28,070 ) (17.6 ) % Rationalization and asset impairment charges 7,074 0.7 % 8,364 0.9 % 1,290 15.4 % Operating income 171,441 16.6 % 142,109 15.2 % 29,332 20.6 % Interest expense, net 10,809 1.0 % 8,210 0.9 % (2,599 ) (31.7 ) % Other income 801 0.1 % 3,588 0.4 % (2,787 ) (77.7 ) % Income before income taxes 161,433 15.6 % 137,487 14.7 % 23,946 17.4 % Income taxes 32,090 3.1 % 28,262 3.0 % (3,828 ) (13.5 ) % Effective tax rate 19.9 % 20.6 % 0.7 % Net income $ 129,343 12.5 % $ 109,225 11.7 % $ 20,118 18.4 % Basic earnings per share $ 2.26 $ 1.89 $ 0.37 19.6 % Diluted earnings per share $ 2.22 $ 1.87 $ 0.35 18.7 % Weighted average shares (basic) 57,320 57,823 Weighted average shares (diluted) 58,136 58,526 Fav (Unfav) to Nine Months Ended September 30, Prior Year 2023 % of Sales 2022 % of Sales $ % Net sales $ 3,133,122 100.0 % $ 2,830,277 100.0 % $ 302,845 10.7 % Cost of goods sold 2,038,707 65.1 % 1,857,501 65.6 % (181,206 ) (9.8 ) % Gross profit 1,094,415 34.9 % 972,776 34.4 % 121,639 12.5 % Selling, general & administrative expenses 569,979 18.2 % 492,523 17.4 % (77,456 ) (15.7 ) % Rationalization and asset impairment charges 10,618 0.3 % 9,405 0.3 % (1,213 ) (12.9 ) % Operating income 513,818 16.4 % 470,848 16.6 % 42,970 9.1 % Interest expense, net 35,708 1.1 % 20,867 0.7 % (14,841 ) (71.1 ) % Other income 11,727 0.4 % 7,088 0.3 % 4,639 65.4 % Income before income taxes 489,837 15.6 % 457,069 16.1 % 32,768 7.2 % Income taxes 101,232 3.2 % 93,991 3.3 % (7,241 ) (7.7 ) % Effective tax rate 20.7 % 20.6 % (0.1 ) % Net income $ 388,605 12.4 % $ 363,078 12.8 % $ 25,527 7.0 % Basic earnings per share $ 6.76 $ 6.24 $ 0.52 8.3 % Diluted earnings per share $ 6.67 $ 6.17 $ 0.50 8.1 % Weighted average shares (basic) 57,465 58,148 Weighted average shares (diluted) 58,277 58,815 Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)Balance Sheet Highlights Selected Consolidated Balance Sheet Data September 30, 2023 December 31, 2022 Cash and cash equivalents $ 342,667 $ 197,150 Accounts receivable, net 537,637 541,529 Inventories 612,338 665,451 Total current assets 1,672,294 1,557,790 Property, plant and equipment, net 565,875 544,871 Total assets 3,325,895 3,180,546 Trade accounts payable 328,460 352,079 Total current liabilities 808,142 852,897 Short-term debt (1) 7,700 93,483 Long-term debt, less current portion 1,102,858 1,110,396 Total equity 1,225,582 1,034,041 Operating Working Capital September 30, 2023 December 31, 2022 Average operating working capital to Net sales (2) 18.3 % 20.9 % Invested Capital September 30, 2023 December 31, 2022 Short-term debt (1) $ 7,700 $ 93,483 Long-term debt, less current portion 1,102,858 1,110,396 Total debt 1,110,558 1,203,879 Total equity 1,225,582 1,034,041 Invested capital $ 2,336,140 $ 2,237,920 Total debt / invested capital 47.5 % 53.8 % (1) Includes current portion of long-term debt. (2) Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales. Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)Non-GAAP Financial Measures Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating income as reported $ 171,441 $ 142,109 $ 513,818 $ 470,848 Special items (pre-tax): Rationalization and asset impairment charges (2) 7,074 8,364 10,618 9,405 Acquisition transaction costs (3) — 3,068 — 3,068 Amortization of step up in value of acquired inventories (4) 4,852 (353 ) 12,252 1,106 Adjusted operating income (1) $ 183,367 $ 153,188 $ 536,688 $ 484,427 As a percent of net sales 17.7 % 16.4 % 17.1 % 17.1 % Net income as reported $ 129,343 $ 109,225 $ 388,605 $ 363,078 Special items: Rationalization and asset impairment charges (2) 7,074 8,364 10,618 9,405 Acquisition transaction costs (3) — 3,068 — 3,068 Pension settlement net gains (5) — — — (4,273 ) Amortization of step up in value of acquired inventories (4) 4,852 (353 ) 12,252 1,106 Gain on asset disposal (6) — — (1,646 ) — Tax effect of Special items (7) (1,780 ) (731 ) (3,908 ) 58 Adjusted net income (1) 139,489 119,573 405,921 372,442 Interest expense, net 10,809 8,210 35,708 20,867 Income taxes as reported 32,090 28,262 101,232 93,991 Tax effect of Special items (7) 1,780 731 3,908 (58 ) Adjusted EBIT (1) $ 184,168 $ 156,776 $ 546,769 $ 487,242 Effective tax rate as reported 19.9 % 20.6 % 20.7 % 20.6 % Net special item tax impact (0.4 ) % (1.1 ) % (0.1 ) % (0.5 ) % Adjusted effective tax rate (1) 19.5 % 19.5 % 20.6 % 20.1 % Diluted earnings per share as reported $ 2.22 $ 1.87 $ 6.67 $ 6.17 Special items per share 0.18 0.17 0.30 0.16 Adjusted diluted earnings per share (1) $ 2.40 $ 2.04 $ 6.97 $ 6.33 Weighted average shares (diluted) 58,136 58,526 58,277 58,815 (1) Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate and adjusted diluted EPS are non-GAAP financial measures. Refer to Non-GAAP Information section. (2) 2023 charges are primarily related to restructuring activities and impairments within International Welding. 2022 charges are primarily related to severance, gains or losses on the disposal of assets. (3) Related to acquisitions and are included in Selling, general & administrative expenses. (4) Related to acquisitions and are included in Cost of goods sold. (5) Pension net gains primarily due to the final settlement associated with the termination of a pension plan and are included in Other income. (6) Gain on asset disposal and included in Other income. (7) Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item. Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)Non-GAAP Financial Measures Twelve Months Ended September 30, Return on Invested Capital 2023 2022 Net income as reported $ 497,751 $ 437,505 Plus: Interest expense (after-tax) 36,283 20,732 Less: Interest income (after-tax) 3,104 1,019 Net operating profit after taxes $ 530,930 $ 457,218 Special Items: Rationalization and asset impairment charges 13,001 10,955 Acquisition transaction costs 2,935 3,068 Pension settlement charges (2) — 42,131 Amortization of step up in value of acquired inventories 12,253 1,379 Gain on asset disposal (1,646 ) — Tax effect of Special items (3) (5,159 ) (26,393 ) Adjusted net operating profit after taxes (1) $ 552,314 $ 488,358 Invested Capital September 30, 2023 September 30, 2022 Short-term debt $ 7,700 $ 68,375 Long-term debt, less current portion 1,102,858 711,250 Total debt 1,110,558 779,625 Total equity 1,225,582 924,228 Invested capital $ 2,336,140 $ 1,703,853 Return on invested capital as reported 22.7 % 26.8 % Adjusted return on invested capital (1) 23.6 % 28.7 % (1) Adjusted net operating profit after taxes and adjusted ROIC are non-GAAP financial measures. Refer to Non-GAAP Information section. (2) Related to lump sum pension payments due to the final settlement associated with the termination of a pension plan. (3) Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item. Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)Condensed Consolidated Statements of Cash Flows Three Months Ended September 30, 2023 2022 OPERATING ACTIVITIES: Net income $ 129,343 $ 109,225 Adjustments to reconcile Net income to Net cash provided by operating activities: Rationalization and asset impairment net charges (6 ) 7,889 Depreciation and amortization 21,489 19,250 Equity (earnings) loss in affiliates, net (169 ) 434 Other non-cash items, net 210 (1,409 ) Changes in operating assets and liabilities, net of effects from acquisitions: Decrease in accounts receivable 25,585 39,390 Decrease (Increase) in inventories 51,514 (22,984 ) Decrease in trade accounts payable (26,238 ) (24,680 ) Net change in other current assets and liabilities 27,772 11,296 Net change in other long-term assets and liabilities (6,396 ) (8,128 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 223,104 130,283 INVESTING ACTIVITIES: Capital expenditures (25,907 ) (17,699 ) Acquisition of businesses, net of cash acquired (28 ) (199 ) Proceeds from sale of property, plant and equipment 704 646 Purchase of marketable securities 468 — NET CASH USED BY INVESTING ACTIVITIES (24,763 ) (17,252 ) FINANCING ACTIVITIES: Payments on short-term borrowings (2,594 ) (55,561 ) Payments on long-term borrowings (1,019 ) (1,269 ) Proceeds from exercise of stock options 1,289 751 Purchase of shares for treasury (45,355 ) (26,518 ) Cash dividends paid to shareholders (36,805 ) (32,463 ) NET CASH USED BY FINANCING ACTIVITIES (84,484 ) (115,060 ) Effect of exchange rate changes on Cash and cash equivalents 8,327 (9,460 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 122,184 (11,489 ) Cash and cash equivalents at beginning of period 220,483 152,796 Cash and cash equivalents at end of period $ 342,667 $ 141,307 Cash dividends paid per share $ 0.64 $ 0.56 Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2023 2022 OPERATING ACTIVITIES: Net income $ 388,605 $ 363,078 Adjustments to reconcile Net income to Net cash provided by operating activities: Rationalization and asset impairment net charges 1,128 7,776 Depreciation and amortization 64,701 59,009 Equity (earnings) loss in affiliates, net (463 ) 254 Other non-cash items, net 21,890 2,413 Changes in operating assets and liabilities, net of effects from acquisitions: Decrease (Increase) in accounts receivable 6,695 (64,569 ) Decrease (Increase) in inventories 57,781 (135,578 ) (Decrease) Increase in trade accounts payable (24,672 ) 19,572 Net change in other current assets and liabilities 43,246 32,470 Net change in other long-term assets and liabilities (13,031 ) (12,841 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 545,880 271,584 INVESTING ACTIVITIES: Capital expenditures (66,459 ) (52,301 ) Acquisition of businesses, net of cash acquired (32,685 ) (22,294 ) Proceeds from sale of property, plant and equipment 4,596 2,338 Purchase of marketable securities (6,561 ) — NET CASH USED BY INVESTING ACTIVITIES (101,109 ) (72,257 ) FINANCING ACTIVITIES: (Payments on) proceeds from short-term borrowings (74,818 ) 9,399 (Payments on) proceeds from long-term borrowings (7,997 ) 5,600 Proceeds from exercise of stock options 13,299 2,168 Purchase of shares for treasury (130,589 ) (156,216 ) Cash dividends paid to shareholders (111,277 ) (98,377 ) NET CASH USED BY FINANCING ACTIVITIES (311,382 ) (237,426 ) Effect of exchange rate changes on Cash and cash equivalents 12,128 (13,552 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 145,517 (51,651 ) Cash and cash equivalents at beginning of period 197,150 192,958 Cash and cash equivalents at end of period $ 342,667 $ 141,307 Cash dividends paid per share $ 1.92 $ 1.68 Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)Americas International The Harris Corporate / Welding Welding Products Group Eliminations Consolidated Three months ended September 30, 2023 Net sales $ 665,228 $ 242,010 $ 125,976 $ — $ 1,033,214 Inter-segment sales 28,875 4,896 2,299 (36,070 ) — Total sales $ 694,103 $ 246,906 $ 128,275 $ (36,070 ) $ 1,033,214 Net income $ 129,343 As a percent of total sales 12.5 % EBIT (1) $ 132,420 $ 22,369 $ 20,405 $ (2,952 ) $ 172,242 As a percent of total sales 19.1 % 9.1 % 15.9 % 16.7 % Special items charges (3) 4,056 7,870 — — 11,926 Adjusted EBIT (2) $ 136,476 $ 30,239 $ 20,405 $ (2,952 ) $ 184,168 As a percent of total sales 19.7 % 12.2 % 15.9 % 17.8 % Three months ended September 30, 2022 Net sales $ 585,628 $ 216,497 $ 133,115 $ — $ 935,240 Inter-segment sales 35,353 9,994 2,642 (47,989 ) — Total sales $ 620,981 $ 226,491 $ 135,757 $ (47,989 ) $ 935,240 Net income $ 109,225 As a percent of total sales 11.7 % EBIT (1) $ 119,157 $ 16,861 $ 14,432 $ (4,753 ) $ 145,697 As a percent of total sales 19.2 % 7.4 % 10.6 % 15.6 % Special items charges (4) (353 ) 8,364 — 3,068 11,079 Adjusted EBIT (2) $ 118,804 $ 25,225 $ 14,432 $ (1,685 ) $ 156,776 As a percent of total sales 19.1 % 11.1 % 10.6 % 16.8 % (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 2023 primarily reflect amortization of step up in value of acquired inventories of $3,648 and $1,204 in Americas and International Welding, respectively, and Rationalization and asset impairment net charges of $408 and $6,666 in Americas and International Welding, respectively. (4) Special items in 2022 primarily reflect an adjustment to the amortization of step up in value of acquired inventories of $353 in Americas Welding related to an acquisition, Rationalization and asset impairment charges of 8,364 in International Welding and acquisition transaction costs of $3,068 in Corporate/Eliminations related to an acquisition. Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)Americas International The Harris Corporate / Welding Welding Products Group Eliminations Consolidated Nine months ended September 30, 2023 Net sales $ 2,000,839 $ 747,829 $ 384,454 $ — $ 3,133,122 Inter-segment sales 92,043 19,941 8,063 (120,047 ) — Total sales $ 2,092,882 $ 767,770 $ 392,517 $ (120,047 ) $ 3,133,122 Net income $ 388,605 As a percent of total sales 12.4 % EBIT (1) $ 399,002 $ 82,183 $ 58,898 $ (14,538 ) $ 525,545 As a percent of total sales 19.1 % 10.7 % 15.0 % 16.8 % Special items charges (3) 9,798 11,426 — — 21,224 Adjusted EBIT (2) $ 408,800 $ 93,609 $ 58,898 $ (14,538 ) $ 546,769 As a percent of total sales 19.5 % 12.2 % 15.0 % 17.5 % Nine months ended September 30, 2022 Net sales $ 1,715,342 $ 711,167 $ 403,768 $ — $ 2,830,277 Inter-segment sales 92,540 25,749 8,570 (126,859 ) — Total sales $ 1,807,882 $ 736,916 $ 412,338 $ (126,859 ) $ 2,830,277 Net income $ 363,078 As a percent of total sales 12.8 % EBIT (1) $ 352,066 $ 87,456 $ 51,952 $ (13,538 ) $ 477,936 As a percent of total sales 19.5 % 11.9 % 12.6 % 16.9 % Special items charges (4) (3,627 ) 9,865 — 3,068 9,306 Adjusted EBIT (2) $ 348,439 $ 97,321 $ 51,952 $ (10,470 ) $ 487,242 As a percent of total sales 19.3 % 13.2 % 12.6 % 17.2 % (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 2023 primarily reflect amortization of step up in value of acquired inventories of $9,390 and $2,862 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $408 and $10,210 in Americas and International Welding, respectively, and a gain on asset disposal of $1,646 in International Welding. (4) Special items in 2022 primarily reflect amortization of step up in value of acquired inventories of $1,106 in Americas Welding related to an acquisition, acquisition transaction costs of $3,068 in Corporate/Eliminations related to an acquisition, and a $3,735 net gain related to the final settlement associated with the termination of a pension plan in Americas Welding. Special items in 2022 also include Rationalization and asset impairment charges of $10,403 in International Welding and net gains of $998 in Americas 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 Foreign Net Sales 2022 Volume Acquisitions Price Exchange 2023 Operating Segments Americas Welding $ 585,628 $ 2,072 $ 72,159 $ 3,488 $ 1,881 $ 665,228 International Welding 216,497 6,296 10,564 477 8,176 242,010 The Harris Products Group 133,115 (14,919 ) — 6,231 1,549 125,976 Consolidated $ 935,240 $ (6,551 ) $ 82,723 $ 10,196 $ 11,606 $ 1,033,214 % Change Americas Welding 0.4 % 12.3 % 0.6 % 0.3 % 13.6 % International Welding 2.9 % 4.9 % 0.2 % 3.8 % 11.8 % The Harris Products Group (11.2 ) % — 4.7 % 1.2 % (5.4 ) % Consolidated (0.7 ) % 8.8 % 1.1 % 1.2 % 10.5 % Nine Months Ended September 30th Change in Net Sales by Segment
Change in Net Sales due to: Net Sales Foreign Net Sales 2022 Volume Acquisitions Price Exchange 2023 Operating Segments Americas Welding $ 1,715,342 $ 95,106 $ 161,355 $ 34,161 $ (5,125 ) $ 2,000,839 International Welding 711,167 645 23,929 16,345 (4,257 ) 747,829 The Harris Products Group 403,768 (28,789 ) — 8,204 1,271 384,454 Consolidated $ 2,830,277 $ 66,962 $ 185,284 $ 58,710 $ (8,111 ) $ 3,133,122 % Change Americas Welding 5.5 % 9.4 % 2.0 % (0.3 ) % 16.6 % International Welding 0.1 % 3.4 % 2.3 % (0.6 ) % 5.2 % The Harris Products Group (7.1 ) % — 2.0 % 0.3 % (4.8 ) % Consolidated 2.4 % 6.5 % 2.1 % (0.3 ) % 10.7 % 
Contact Amanda Butler Vice President, Investor Relations & Communications Tel: 216.383.2534 Email: Amanda_Butler@lincolnelectric.com
- Net sales increase 10.5% to record $1,033 million