Ohio | 34-1860551 | |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
Item 2.02 | Results of Operations and Financial Condition. | |
On February 14, 2017, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended December 31, 2016. A copy of the Company’s press release issued on February 14, 2017 is attached hereto as Exhibit 99.1 and incorporated herein by reference. The press release is also available through the Company’s website at www.lincolnelectric.com. The information in this Current Report on Form 8-K, including the Exhibit, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act. | ||
Item 9.01 | Financial Statements and Exhibits. | |
(d) Exhibits | ||
99.1 The Company’s press release dated February 14, 2017. |
LINCOLN ELECTRIC HOLDINGS, INC. | ||
/s/ Vincent K. Petrella | ||
Vincent K. Petrella | ||
Executive Vice President, Chief Financial Officer and Treasurer | ||
(principal financial officer) | ||
February 14, 2017 |
Exhibit No. | Exhibit | ||
99.1 | The Company’s press release dated February 14, 2017. | ||
Fourth Quarter and Full Year 2016 Highlights |
§ Fourth quarter EPS of $0.81; Full year 2016 EPS of $2.91 and Adjusted EPS of $3.29 |
§ Fourth quarter operating income margin resilient at 14.7% |
§ Record average operating working capital to net sales ratio of 15.6% |
§ Solid cash flow from operations and over 100% cash conversion of net income(1) in fourth quarter and full year 2016 |
§ Returned $429 million to shareholders in 2016 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. |
Three months ended December 31, | Fav (Unfav) to Prior Year | ||||||||||||||||||||
2016 | % of Sales | 2015 | % of Sales | $ | % | ||||||||||||||||
Net sales | $ | 563,828 | 100.0 | % | $ | 567,985 | 100.0 | % | $ | (4,157 | ) | (0.7 | %) | ||||||||
Cost of goods sold | 366,371 | 65.0 | % | 371,906 | 65.5 | % | 5,535 | 1.5 | % | ||||||||||||
Gross profit | 197,457 | 35.0 | % | 196,079 | 34.5 | % | 1,378 | 0.7 | % | ||||||||||||
Selling, general & administrative expenses | 114,386 | 20.3 | % | 110,803 | 19.5 | % | (3,583 | ) | (3.2 | %) | |||||||||||
Rationalization and asset impairment charges | — | — | 434 | 0.1 | % | 434 | 100.0 | % | |||||||||||||
Pension settlement charges | — | — | 6,407 | 1.1 | % | 6,407 | 100.0 | % | |||||||||||||
Operating income | 83,071 | 14.7 | % | 78,435 | 13.8 | % | 4,636 | 5.9 | % | ||||||||||||
Interest income | 867 | 0.2 | % | 691 | 0.1 | % | 176 | 25.5 | % | ||||||||||||
Equity earnings in affiliates | 844 | 0.1 | % | 877 | 0.2 | % | (33 | ) | (3.8 | %) | |||||||||||
Other income | 621 | 0.1 | % | 959 | 0.2 | % | (338 | ) | (35.2 | %) | |||||||||||
Interest expense | (7,251 | ) | (1.3 | %) | (9,790 | ) | (1.7 | %) | 2,539 | 25.9 | % | ||||||||||
Income before income taxes | 78,152 | 13.9 | % | 71,172 | 12.5 | % | 6,980 | 9.8 | % | ||||||||||||
Income taxes | 24,751 | 4.4 | % | 22,473 | 4.0 | % | (2,278 | ) | (10.1 | %) | |||||||||||
Effective tax rate | 31.7 | % | 31.6 | % | (0.1 | %) | |||||||||||||||
Net income including non-controlling interests | 53,401 | 9.5 | % | 48,699 | 8.6 | % | 4,702 | 9.7 | % | ||||||||||||
Non-controlling interests in subsidiaries’ income (loss) | 6 | — | 7 | — | (1 | ) | (14.3 | %) | |||||||||||||
Net income | $ | 53,395 | 9.5 | % | $ | 48,692 | 8.6 | % | $ | 4,703 | 9.7 | % | |||||||||
Basic earnings per share | $ | 0.81 | $ | 0.68 | $ | 0.13 | 19.1 | % | |||||||||||||
Diluted earnings per share | $ | 0.81 | $ | 0.68 | $ | 0.13 | 19.1 | % | |||||||||||||
Weighted average shares (basic) | 65,603 | 71,446 | |||||||||||||||||||
Weighted average shares (diluted) | 66,303 | 72,121 | |||||||||||||||||||
Twelve months ended December 31, | Fav (Unfav) to Prior Year | ||||||||||||||||||||
2016 | % of Sales | 2015 | % of Sales | $ | % | ||||||||||||||||
Net sales | $ | 2,274,614 | 100.0 | % | $ | 2,535,791 | 100.0 | % | $ | (261,177 | ) | (10.3 | %) | ||||||||
Cost of goods sold | 1,485,316 | 65.3 | % | 1,694,647 | 66.8 | % | 209,331 | 12.4 | % | ||||||||||||
Gross profit | 789,298 | 34.7 | % | 841,144 | 33.2 | % | (51,846 | ) | (6.2 | %) | |||||||||||
Selling, general & administrative expenses | 466,676 | 20.5 | % | 496,748 | 19.6 | % | 30,072 | 6.1 | % | ||||||||||||
Rationalization and asset impairment charges | — | — | 19,958 | 0.8 | % | 19,958 | 100.0 | % | |||||||||||||
Pension settlement charges | — | — | 142,738 | 5.6 | % | 142,738 | 100.0 | % | |||||||||||||
Loss on deconsolidation of Venezuelan subsidiary | 34,348 | 1.5 | % | — | — | (34,348 | ) | (100.0 | %) | ||||||||||||
Operating income | 288,274 | 12.7 | % | 181,700 | 7.2 | % | 106,574 | 58.7 | % | ||||||||||||
Interest income | 2,092 | 0.1 | % | 2,714 | 0.1 | % | (622 | ) | (22.9 | %) | |||||||||||
Equity earnings in affiliates | 2,928 | 0.1 | % | 3,015 | 0.1 | % | (87 | ) | (2.9 | %) | |||||||||||
Other income | 3,173 | 0.1 | % | 4,182 | 0.2 | % | (1,009 | ) | (24.1 | %) | |||||||||||
Interest expense | (19,079 | ) | (0.8 | %) | (21,824 | ) | (0.9 | %) | 2,745 | 12.6 | % | ||||||||||
Income before income taxes | 277,388 | 12.2 | % | 169,787 | 6.7 | % | 107,601 | 63.4 | % | ||||||||||||
Income taxes | 79,015 | 3.5 | % | 42,375 | 1.7 | % | (36,640 | ) | (86.5 | %) | |||||||||||
Effective tax rate | 28.5 | % | 25.0 | % | (3.5 | %) | |||||||||||||||
Net income including non-controlling interests | 198,373 | 8.7 | % | 127,412 | 5.0 | % | 70,961 | 55.7 | % | ||||||||||||
Non-controlling interests in subsidiaries’ income (loss) | (26 | ) | — | (66 | ) | — | 40 | 60.6 | % | ||||||||||||
Net income | $ | 198,399 | 8.7 | % | $ | 127,478 | 5.0 | % | $ | 70,921 | 55.6 | % | |||||||||
Basic earnings per share | $ | 2.94 | $ | 1.72 | $ | 1.22 | 70.9 | % | |||||||||||||
Diluted earnings per share | $ | 2.91 | $ | 1.70 | $ | 1.21 | 71.2 | % | |||||||||||||
Weighted average shares (basic) | 67,462 | 74,111 | |||||||||||||||||||
Weighted average shares (diluted) | 68,156 | 74,854 |
Selected Consolidated Balance Sheet Data | December 31, 2016 | December 31, 2015 | ||||||
Cash and cash equivalents | $ | 379,179 | $ | 304,183 | ||||
Total current assets | 1,043,713 | 935,995 | ||||||
Property, plant and equipment, net | 372,377 | 411,323 | ||||||
Total assets | 1,943,437 | 1,784,171 | ||||||
Total current liabilities | 388,107 | 370,122 | ||||||
Short-term debt (1) | 1,889 | 4,278 | ||||||
Long-term debt, less current portion | 703,704 | 350,347 | ||||||
Total equity | 712,206 | 932,448 | ||||||
Operating Working Capital | December 31, 2016 | December 31, 2015 | ||||||
Accounts receivable | $ | 273,993 | $ | 264,715 | ||||
Inventories | 255,406 | 275,930 | ||||||
Trade accounts payable | 176,757 | 152,620 | ||||||
Operating working capital | $ | 352,642 | $ | 388,025 | ||||
Average operating working capital to net sales (2) | 15.6 | % | 17.1 | % | ||||
Invested Capital | December 31, 2016 | December 31, 2015 | ||||||
Short-term debt (1) | $ | 1,889 | $ | 4,278 | ||||
Long-term debt, less current portion | 703,704 | 350,347 | ||||||
Total debt | 705,593 | 354,625 | ||||||
Total equity | 712,206 | 932,448 | ||||||
Invested capital | $ | 1,417,799 | $ | 1,287,073 | ||||
Total debt / invested capital | 49.8 | % | 27.6 | % |
(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. |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Operating income as reported | $ | 83,071 | $ | 78,435 | $ | 288,274 | $ | 181,700 | ||||||||
Special items (pre-tax): | ||||||||||||||||
Rationalization and asset impairment charges (1) | — | 434 | — | 19,958 | ||||||||||||
Loss on deconsolidation of Venezuelan subsidiary (2) | — | — | 34,348 | — | ||||||||||||
Venezuela foreign exchange losses (3) | — | 708 | — | 27,214 | ||||||||||||
Pension settlement charges (4) | — | 6,407 | — | 142,738 | ||||||||||||
Adjusted operating income (6) | $ | 83,071 | $ | 85,984 | $ | 322,622 | $ | 371,610 | ||||||||
As a percent of total sales | 14.7 | % | 15.1 | % | 14.2 | % | 14.7 | % | ||||||||
Net income as reported | $ | 53,395 | $ | 48,692 | $ | 198,399 | $ | 127,478 | ||||||||
Special items (after-tax): | ||||||||||||||||
Rationalization and asset impairment charges (1) | — | 450 | — | 18,182 | ||||||||||||
Loss on deconsolidation of Venezuelan subsidiary (2) | — | — | 33,251 | — | ||||||||||||
Venezuela foreign exchange losses (3) | — | 708 | — | 27,214 | ||||||||||||
Pension settlement charges (4) | — | 3,969 | — | 87,310 | ||||||||||||
Income tax valuation reversals (5) | — | — | (7,196 | ) | — | |||||||||||
Adjusted net income (6) | $ | 53,395 | $ | 53,819 | $ | 224,454 | $ | 260,184 | ||||||||
Diluted earnings per share as reported | $ | 0.81 | $ | 0.68 | $ | 2.91 | $ | 1.70 | ||||||||
Special items | — | 0.07 | 0.38 | 1.78 | ||||||||||||
Adjusted diluted earnings per share (6) | $ | 0.81 | $ | 0.75 | $ | 3.29 | $ | 3.48 | ||||||||
Weighted average shares (diluted) | 66,303 | 72,121 | 68,156 | 74,854 | ||||||||||||
(1) | The three and twelve months ended December 31, 2015 include net charges primarily related to severance and other related costs. The twelve months ended also includes charges related to the impairment of long-lived assets and goodwill. |
(2) | The twelve months ended December 31, 2016 reflect a charge (non-cash charge of $34.1 million pretax and $33.0 million after-tax) related to the deconsolidation of the Company's Venezuelan subsidiary. |
(3) | The three and twelve months ended December 31, 2015 represent the impact of Venezuelan remeasurement losses related to the adoption of new foreign exchange mechanisms. |
(4) | The three and twelve months ended December 31, 2015 include pension settlement charges primarily related to the purchase of a group annuity contract. |
(5) | The twelve months ended December 31, 2016 reflect reduced income tax expense related to the reversal of an income tax valuation allowance as a result of a legal entity change to realign the Company’s tax structure. |
(6) | Adjusted operating income, Adjusted net income 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 believe 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. |
Twelve Months Ended December 31, | ||||||||
Return on Invested Capital | 2016 | 2015 | ||||||
Net income as reported | $ | 198,399 | $ | 127,478 | ||||
Rationalization and asset impairment charges, net of tax of $1,776 | — | 18,182 | ||||||
Loss on deconsolidation of Venezuelan subsidiary, net of tax of $1,097 | 33,251 | — | ||||||
Income tax valuation reversals | (7,196 | ) | — | |||||
Pension settlement charges, net of tax of $55,428 | — | 87,310 | ||||||
Venezuela foreign exchange losses | — | 27,214 | ||||||
Adjusted net income (1) | $ | 224,454 | $ | 260,184 | ||||
Plus: Interest expense, net of tax of $7,304 and $8,355 in 2016 and 2015, respectively | 11,775 | 13,469 | ||||||
Less: Interest income, net of tax of $801 and $1,039 in 2016 and 2015, respectively | 1,291 | 1,675 | ||||||
Adjusted net income before tax effected interest | $ | 234,938 | $ | 271,978 | ||||
Invested Capital | December 31, 2016 | December 31, 2015 | ||||||
Short-term debt | $ | 1,889 | $ | 4,278 | ||||
Long-term debt, less current portion | 703,704 | 350,347 | ||||||
Total debt | 705,593 | 354,625 | ||||||
Total equity | 712,206 | 932,448 | ||||||
Invested capital | $ | 1,417,799 | $ | 1,287,073 | ||||
Return on invested capital (1)(2) | 16.6 | % | 21.1 | % | ||||
(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 believe 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 excluding tax-effected interest income and expense divided by invested capital. |
Three months ended December 31, | ||||||||
2016 | 2015 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 53,395 | $ | 48,692 | ||||
Non-controlling interests in subsidiaries’ income | 6 | 7 | ||||||
Net income including non-controlling interests | 53,401 | 48,699 | ||||||
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | ||||||||
Rationalization and asset impairment charges | — | 149 | ||||||
Depreciation and amortization | 16,578 | 16,110 | ||||||
Equity earnings in affiliates, net | (197 | ) | (278 | ) | ||||
Pension expense, settlements and curtailments | 1,516 | 10,967 | ||||||
Pension contributions and payments | (325 | ) | (1,426 | ) | ||||
Other non-cash items, net | 3,588 | 5,469 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
(Increase) decrease in accounts receivable | (358 | ) | 42,080 | |||||
Decrease in inventories | 22,274 | 28,243 | ||||||
Increase (decrease) in trade accounts payable | 15,705 | (12,282 | ) | |||||
Net change in other current assets and liabilities | (47,332 | ) | (67,467 | ) | ||||
Net change in other long-term assets and liabilities | 1,787 | 5,158 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 66,637 | 75,422 | ||||||
INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (10,500 | ) | (10,320 | ) | ||||
Acquisition of businesses, net of cash acquired | — | (3,194 | ) | |||||
Proceeds from sale of property, plant and equipment | 191 | 137 | ||||||
Purchase of marketable securities | (38,920 | ) | — | |||||
Other investing activities | (426 | ) | — | |||||
NET CASH USED BY INVESTING ACTIVITIES | (49,655 | ) | (13,377 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Net change in borrowings | 168,060 | 2,186 | ||||||
Proceeds from exercise of stock options | 14,631 | 1,396 | ||||||
Excess tax benefits from stock-based compensation | 5,740 | 487 | ||||||
Purchase of shares for treasury | (53,409 | ) | (101,690 | ) | ||||
Cash dividends paid to shareholders | (21,150 | ) | (21,026 | ) | ||||
Other financing activities | (799 | ) | 18 | |||||
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES | 113,073 | (118,629 | ) | |||||
Effect of exchange rate changes on Cash and cash equivalents | (7,804 | ) | (3,578 | ) | ||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 122,251 | (60,162 | ) | |||||
Cash and cash equivalents at beginning of period | 256,928 | 364,345 | ||||||
Cash and cash equivalents at end of period | $ | 379,179 | $ | 304,183 | ||||
Cash dividends paid per share | $ | 0.32 | $ | 0.29 |
Twelve months ended December 31, | ||||||||
2016 | 2015 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 198,399 | $ | 127,478 | ||||
Non-controlling interests in subsidiaries’ loss | (26 | ) | (66 | ) | ||||
Net income including non-controlling interests | 198,373 | 127,412 | ||||||
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | ||||||||
Rationalization and asset impairment charges | — | 6,269 | ||||||
Loss on deconsolidation of Venezuelan subsidiary | 34,348 | — | ||||||
Depreciation and amortization | 65,073 | 64,007 | ||||||
Equity earnings in affiliates, net | (261 | ) | (530 | ) | ||||
Pension expense, settlements and curtailments | 13,988 | 162,815 | ||||||
Pension contributions and payments | (22,484 | ) | (53,547 | ) | ||||
Other non-cash items, net | (3,549 | ) | (46,838 | ) | ||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
(Increase) decrease in accounts receivable | (12,314 | ) | 56,741 | |||||
Decrease in inventories | 14,601 | 56,067 | ||||||
Increase (decrease) in trade accounts payable | 29,627 | (46,911 | ) | |||||
Net change in other current assets and liabilities | (16,908 | ) | (20,435 | ) | ||||
Net change in other long-term assets and liabilities | 2,909 | 5,808 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 303,403 | 310,858 | ||||||
INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (49,877 | ) | (50,507 | ) | ||||
Acquisition of businesses, net of cash acquired | (71,567 | ) | (37,076 | ) | ||||
Proceeds from sale of property, plant and equipment | 1,127 | 2,310 | ||||||
Purchase of marketable securities | (38,920 | ) | — | |||||
Other investing activities | (709 | ) | (79 | ) | ||||
NET CASH USED BY INVESTING ACTIVITIES | (159,946 | ) | (85,352 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Net change in borrowings | 351,319 | 316,606 | ||||||
Proceeds from exercise of stock options | 25,049 | 5,996 | ||||||
Excess tax benefits from stock-based compensation | 9,154 | 1,974 | ||||||
Purchase of shares for treasury | (342,003 | ) | (399,494 | ) | ||||
Cash dividends paid to shareholders | (87,330 | ) | (86,968 | ) | ||||
Other financing activities | (19,043 | ) | (8,022 | ) | ||||
NET CASH USED BY FINANCING ACTIVITIES | (62,854 | ) | (169,908 | ) | ||||
Effect of exchange rate changes on Cash and cash equivalents | (5,607 | ) | (29,794 | ) | ||||
INCREASE IN CASH AND CASH EQUIVALENTS | 74,996 | 25,804 | ||||||
Cash and cash equivalents at beginning of period | 304,183 | 278,379 | ||||||
Cash and cash equivalents at end of period | $ | 379,179 | $ | 304,183 | ||||
Cash dividends paid per share | $ | 1.28 | $ | 1.16 |
Americas Welding | International Welding | The Harris Products Group | Corporate / Eliminations | Consolidated | ||||||||||||||||
Three months ended December 31, 2016 | ||||||||||||||||||||
Net sales | $ | 370,082 | $ | 130,605 | $ | 63,141 | $ | — | $ | 563,828 | ||||||||||
Inter-segment sales | 23,939 | 4,020 | 1,726 | (29,685 | ) | — | ||||||||||||||
Total | $ | 394,021 | $ | 134,625 | $ | 64,867 | $ | (29,685 | ) | $ | 563,828 | |||||||||
EBIT (2) | $ | 71,709 | $ | 7,447 | $ | 6,628 | $ | (1,248 | ) | $ | 84,536 | |||||||||
As a percent of total sales | 18.2 | % | 5.5 | % | 10.2 | % | 15.0 | % | ||||||||||||
Special items charge (3) | — | — | — | — | — | |||||||||||||||
Adjusted EBIT (4) | $ | 71,709 | $ | 7,447 | $ | 6,628 | $ | (1,248 | ) | $ | 84,536 | |||||||||
As a percent of total sales | 18.2 | % | 5.5 | % | 10.2 | % | 15.0 | % | ||||||||||||
Three months ended December 31, 2015 | ||||||||||||||||||||
Net sales | $ | 387,340 | $ | 121,214 | $ | 59,431 | $ | — | $ | 567,985 | ||||||||||
Inter-segment sales | 20,042 | 3,009 | 2,278 | (25,329 | ) | — | ||||||||||||||
Total | $ | 407,382 | $ | 124,223 | $ | 61,709 | $ | (25,329 | ) | $ | 567,985 | |||||||||
EBIT (2) | $ | 72,027 | $ | 2,804 | $ | 5,661 | $ | (221 | ) | $ | 80,271 | |||||||||
As a percent of total sales | 17.7 | % | 2.3 | % | 9.2 | % | 14.1 | % | ||||||||||||
Special items charge (3) | 7,061 | 488 | — | — | 7,549 | |||||||||||||||
Adjusted EBIT (4) | $ | 79,088 | $ | 3,292 | $ | 5,661 | $ | (221 | ) | $ | 87,820 | |||||||||
As a percent of total sales | 19.4 | % | 2.7 | % | 9.2 | % | 15.5 | % | ||||||||||||
Twelve months ended December 31, 2016 | ||||||||||||||||||||
Net sales | $ | 1,494,982 | $ | 507,289 | $ | 272,343 | $ | — | $ | 2,274,614 | ||||||||||
Inter-segment sales | 93,612 | 15,975 | 8,709 | (118,296 | ) | — | ||||||||||||||
Total | $ | 1,588,594 | $ | 523,264 | $ | 281,052 | $ | (118,296 | ) | $ | 2,274,614 | |||||||||
EBIT (2) | $ | 266,633 | $ | 29,146 | $ | 32,380 | $ | (33,784 | ) | $ | 294,375 | |||||||||
As a percent of total sales | 16.8 | % | 5.6 | % | 11.5 | % | 12.9 | % | ||||||||||||
Special items charge (3) | — | — | — | 34,348 | 34,348 | |||||||||||||||
Adjusted EBIT (4) | $ | 266,633 | $ | 29,146 | $ | 32,380 | $ | 564 | $ | 328,723 | ||||||||||
As a percent of total sales | 16.8 | % | 5.6 | % | 11.5 | % | 14.5 | % | ||||||||||||
Twelve months ended December 31, 2015 | ||||||||||||||||||||
Net sales | $ | 1,741,350 | $ | 530,460 | $ | 263,981 | $ | — | $ | 2,535,791 | ||||||||||
Inter-segment sales | 92,538 | 18,747 | 9,312 | (120,597 | ) | — | ||||||||||||||
Total | $ | 1,833,888 | $ | 549,207 | $ | 273,293 | $ | (120,597 | ) | $ | 2,535,791 | |||||||||
EBIT (2) | $ | 143,450 | $ | 17,840 | $ | 27,882 | $ | (275 | ) | $ | 188,897 | |||||||||
As a percent of total sales | 7.8 | % | 3.2 | % | 10.2 | % | 7.4 | % | ||||||||||||
Special items charge (3) | 173,239 | 16,671 | — | — | 189,910 | |||||||||||||||
Adjusted EBIT (4) | $ | 316,689 | $ | 34,511 | $ | 27,882 | $ | (275 | ) | $ | 378,807 | |||||||||
As a percent of total sales | 17.3 | % | 6.3 | % | 10.2 | % | 14.9 | % |
(1) | As previously announced on February 9, 2016, the Company realigned its organizational structure into three operating segments which was effective beginning in the first quarter of 2016. |
(2) | EBIT is defined as Operating income plus Equity earnings in affiliates and Other income. |
(3) | Special items within Corporate/Elimination reflect a charge ($34.1 million non-cash) related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016. Refer to 'Non-GAAP Financial Measures' for detail on excluded special items. |
(4) | 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. |
Three Months Ended December 31st Change in Net Sales by Segment | ||||||||||||||||||||||||
Change in Net Sales due to: | ||||||||||||||||||||||||
Net Sales 2015 | Volume | Acquisitions | Price | Foreign Exchange | Net Sales 2016 | |||||||||||||||||||
Operating Segments | ||||||||||||||||||||||||
Americas Welding | $ | 387,340 | $ | (22,315 | ) | $ | 7,232 | $ | (176 | ) | $ | (1,999 | ) | $ | 370,082 | |||||||||
International Welding | 121,214 | 12,627 | — | (185 | ) | (3,051 | ) | 130,605 | ||||||||||||||||
The Harris Products Group | 59,431 | 2,322 | — | 902 | 486 | 63,141 | ||||||||||||||||||
Consolidated | $ | 567,985 | $ | (7,366 | ) | $ | 7,232 | $ | 541 | $ | (4,564 | ) | $ | 563,828 | ||||||||||
Americas Welding (excluding Venezuela) | $ | 383,597 | $ | (18,572 | ) | $ | 7,232 | $ | (176 | ) | $ | (1,999 | ) | $ | 370,082 | |||||||||
Consolidated (excluding Venezuela) | $ | 564,242 | $ | (3,623 | ) | $ | 7,232 | $ | 541 | $ | (4,564 | ) | $ | 563,828 | ||||||||||
% Change | ||||||||||||||||||||||||
Americas Welding | (5.8 | %) | 1.9 | % | — | (0.5 | %) | (4.5 | %) | |||||||||||||||
International Welding | 10.4 | % | — | (0.2 | %) | (2.5 | %) | 7.7 | % | |||||||||||||||
The Harris Products Group | 3.9 | % | — | 1.5 | % | 0.8 | % | 6.2 | % | |||||||||||||||
Consolidated | (1.3 | %) | 1.3 | % | 0.1 | % | (0.8 | %) | (0.7 | %) | ||||||||||||||
Americas Welding (excluding Venezuela) | (4.8 | %) | 1.9 | % | — | (0.5 | %) | (3.5 | %) | |||||||||||||||
Consolidated (excluding Venezuela) | (0.6 | %) | 1.3 | % | 0.1 | % | (0.8 | %) | (0.1 | %) | ||||||||||||||
Twelve Months Ended December 31st Change in Net Sales by Segment | ||||||||||||||||||||||||
Change in Net Sales due to: | ||||||||||||||||||||||||
Net Sales 2015 | Volume | Acquisitions | Price | Foreign Exchange | Net Sales 2016 | |||||||||||||||||||
Operating Segments | ||||||||||||||||||||||||
Americas Welding | $ | 1,741,350 | $ | (248,715 | ) | $ | 42,832 | $ | 268,205 | $ | (308,690 | ) | $ | 1,494,982 | ||||||||||
International Welding | 530,460 | (8,629 | ) | 8,622 | (8,428 | ) | (14,736 | ) | $ | 507,289 | ||||||||||||||
The Harris Products Group | 263,981 | 9,683 | — | (85 | ) | (1,236 | ) | $ | 272,343 | |||||||||||||||
Consolidated | $ | 2,535,791 | $ | (247,661 | ) | $ | 51,454 | $ | 259,692 | $ | (324,662 | ) | $ | 2,274,614 | ||||||||||
Americas Welding (excluding Venezuela) | $ | 1,656,687 | $ | (191,037 | ) | $ | 42,832 | $ | (7,874 | ) | $ | (16,440 | ) | $ | 1,484,168 | |||||||||
Consolidated (excluding Venezuela) | $ | 2,451,129 | $ | (189,983 | ) | $ | 51,454 | $ | (16,386 | ) | $ | (32,413 | ) | $ | 2,263,801 | |||||||||
% Change | ||||||||||||||||||||||||
Americas Welding | (14.3 | %) | 2.5 | % | 15.4 | % | (17.7 | %) | (14.1 | %) | ||||||||||||||
International Welding | (1.6 | %) | 1.6 | % | (1.6 | %) | (2.8 | %) | (4.4 | %) | ||||||||||||||
The Harris Products Group | 3.7 | % | — | — | (0.5 | %) | 3.2 | % | ||||||||||||||||
Consolidated | (9.8 | %) | 2.0 | % | 10.2 | % | (12.8 | %) | (10.3 | %) | ||||||||||||||
Americas Welding (excluding Venezuela) | (11.5 | %) | 2.6 | % | (0.5 | %) | (1.0 | %) | (10.4 | %) | ||||||||||||||
Consolidated (excluding Venezuela) | (7.8 | %) | 2.1 | % | (0.7 | %) | (1.3 | %) | (7.6 | %) | ||||||||||||||