Ohio | 34-1860551 | |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol | Name of exchange on which registered |
Common Shares, without par value | LECO | The NASDAQ Stock Market LLC |
Item 2.02 | Results of Operations and Financial Condition. | |
On July 23, 2019, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended June 30, 2019. A copy of the Company’s press release issued on July 23, 2019 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 July 23, 2019. |
LINCOLN ELECTRIC HOLDINGS, INC. | ||
/s/ Vincent K. Petrella | ||
Vincent K. Petrella | ||
Executive Vice President, Chief Financial Officer and Treasurer | ||
(principal financial officer) | ||
July 23, 2019 |
Exhibit No. | Exhibit | |
The Company’s press release dated July 23, 2019. | ||
Second Quarter 2019 Highlights |
§ Q2 EPS increases 30.8% to $1.36, Adjusted EPS increases 4.9% to $1.28 |
§ ROIC increases 300 basis points to 21.0% |
§ Cash flow from operations increases 58% to $126 million |
§ $115 million returned to shareholders through dividends and share repurchases |
Three Months Ended June 30, | Fav (Unfav) to Prior Year | ||||||||||||||||||||
2019 | % of Sales | 2018 | % of Sales | $ | % | ||||||||||||||||
Net sales | $ | 777,008 | 100.0 | % | $ | 790,052 | 100.0 | % | $ | (13,044 | ) | (1.7 | %) | ||||||||
Cost of goods sold | 507,127 | 65.3 | % | 519,936 | 65.8 | % | 12,809 | 2.5 | % | ||||||||||||
Gross profit | 269,881 | 34.7 | % | 270,116 | 34.2 | % | (235 | ) | (0.1 | %) | |||||||||||
Selling, general & administrative expenses | 163,388 | 21.0 | % | 163,940 | 20.8 | % | 552 | 0.3 | % | ||||||||||||
Rationalization and asset impairment charges | 1,307 | 0.2 | % | 11,542 | 1.5 | % | 10,235 | 88.7 | % | ||||||||||||
Operating income | 105,186 | 13.5 | % | 94,634 | 12.0 | % | 10,552 | 11.2 | % | ||||||||||||
Interest expense, net | 5,898 | 0.8 | % | 4,812 | 0.6 | % | (1,086 | ) | (22.6 | %) | |||||||||||
Other income (expense) | 4,196 | 0.5 | % | 4,441 | 0.6 | % | (245 | ) | (5.5 | %) | |||||||||||
Income before income taxes | 103,484 | 13.3 | % | 94,263 | 11.9 | % | 9,221 | 9.8 | % | ||||||||||||
Income taxes | 18,040 | 2.3 | % | 25,404 | 3.2 | % | 7,364 | 29.0 | % | ||||||||||||
Effective tax rate | 17.4 | % | 27.0 | % | 9.6 | % | |||||||||||||||
Net income including non-controlling interests | 85,444 | 11.0 | % | 68,859 | 8.7 | % | 16,585 | 24.1 | % | ||||||||||||
Non-controlling interests in subsidiaries’ loss | (8 | ) | — | (5 | ) | — | (3 | ) | (60.0 | %) | |||||||||||
Net income | $ | 85,452 | 11.0 | % | $ | 68,864 | 8.7 | % | $ | 16,588 | 24.1 | % | |||||||||
Basic earnings per share | $ | 1.37 | $ | 1.05 | $ | 0.32 | 30.5 | % | |||||||||||||
Diluted earnings per share | $ | 1.36 | $ | 1.04 | $ | 0.32 | 30.8 | % | |||||||||||||
Weighted average shares (basic) | 62,305 | 65,337 | |||||||||||||||||||
Weighted average shares (diluted) | 62,970 | 66,121 | |||||||||||||||||||
Six Months Ended June 30, | Fav (Unfav) to Prior Year | ||||||||||||||||||||
2019 | % of Sales | 2018 | % of Sales | $ | % | ||||||||||||||||
Net sales | $ | 1,536,182 | 100.0 | % | $ | 1,547,748 | 100.0 | % | $ | (11,566 | ) | (0.7 | %) | ||||||||
Cost of goods sold | 1,007,880 | 65.6 | % | 1,021,078 | 66.0 | % | 13,198 | 1.3 | % | ||||||||||||
Gross profit | 528,302 | 34.4 | % | 526,670 | 34.0 | % | 1,632 | 0.3 | % | ||||||||||||
Selling, general & administrative expenses | 323,796 | 21.1 | % | 325,131 | 21.0 | % | 1,335 | 0.4 | % | ||||||||||||
Rationalization and asset impairment charges | 4,842 | 0.3 | % | 21,717 | 1.4 | % | 16,875 | 77.7 | % | ||||||||||||
Operating income | 199,664 | 13.0 | % | 179,822 | 11.6 | % | 19,842 | 11.0 | % | ||||||||||||
Interest expense, net | 11,221 | 0.7 | % | 9,253 | 0.6 | % | (1,968 | ) | (21.3 | %) | |||||||||||
Other income (expense) | 7,959 | 0.5 | % | 7,892 | 0.5 | % | 67 | 0.8 | % | ||||||||||||
Income before income taxes | 196,402 | 12.8 | % | 178,461 | 11.5 | % | 17,941 | 10.1 | % | ||||||||||||
Income taxes | 39,492 | 2.6 | % | 48,782 | 3.2 | % | 9,290 | 19.0 | % | ||||||||||||
Effective tax rate | 20.1 | % | 27.3 | % | 7.2 | % | |||||||||||||||
Net income including non-controlling interests | 156,910 | 10.2 | % | 129,679 | 8.4 | % | 27,231 | 21.0 | % | ||||||||||||
Non-controlling interests in subsidiaries’ loss | (22 | ) | — | (9 | ) | — | (13 | ) | (144.4 | %) | |||||||||||
Net income | $ | 156,932 | 10.2 | % | $ | 129,688 | 8.4 | % | $ | 27,244 | 21.0 | % | |||||||||
Basic earnings per share | $ | 2.50 | $ | 1.98 | $ | 0.52 | 26.3 | % | |||||||||||||
Diluted earnings per share | $ | 2.47 | $ | 1.96 | $ | 0.51 | 26.0 | % | |||||||||||||
Weighted average shares (basic) | 62,733 | 65,458 | |||||||||||||||||||
Weighted average shares (diluted) | 63,419 | 66,257 |
Selected Consolidated Balance Sheet Data | June 30, 2019 | December 31, 2018 | ||||||
Cash and cash equivalents | $ | 189,861 | $ | 358,849 | ||||
Total current assets | 1,127,863 | 1,237,799 | ||||||
Property, plant and equipment, net | 512,364 | 478,801 | ||||||
Total assets | 2,394,333 | 2,349,825 | ||||||
Total current liabilities | 571,011 | 538,182 | ||||||
Short-term debt (1) | 30,110 | 111 | ||||||
Long-term debt, less current portion | 710,458 | 702,549 | ||||||
Total equity | 846,058 | 887,592 | ||||||
Operating Working Capital | June 30, 2019 | December 31, 2018 | ||||||
Accounts receivable, net | $ | 428,353 | $ | 396,885 | ||||
Inventories | 397,752 | 361,829 | ||||||
Trade accounts payable | 254,814 | 268,600 | ||||||
Operating working capital | $ | 571,291 | $ | 490,114 | ||||
Average operating working capital to Net sales (2) | 18.4 | % | 16.5 | % | ||||
Invested Capital | June 30, 2019 | December 31, 2018 | ||||||
Short-term debt (1) | $ | 30,110 | $ | 111 | ||||
Long-term debt, less current portion | 710,458 | 702,549 | ||||||
Total debt | 740,568 | 702,660 | ||||||
Total equity | 846,058 | 887,592 | ||||||
Invested capital | $ | 1,586,626 | $ | 1,590,252 | ||||
Total debt / invested capital | 46.7 | % | 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. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Operating income as reported | $ | 105,186 | $ | 94,634 | $ | 199,664 | $ | 179,822 | ||||||||
Special items (pre-tax): | ||||||||||||||||
Rationalization and asset impairment charges (2) | 1,307 | 11,542 | 4,842 | 21,717 | ||||||||||||
Acquisition transaction and integration costs (3) | 1,014 | 788 | 1,804 | 2,695 | ||||||||||||
Amortization of step up in value of acquired inventories (4) | 1,399 | — | 1,399 | — | ||||||||||||
Gains on asset disposals (5) | (3,045 | ) | — | (3,045 | ) | — | ||||||||||
Adjusted operating income (1) | $ | 105,861 | $ | 106,964 | $ | 204,664 | $ | 204,234 | ||||||||
As a percent of total sales | 13.6 | % | 13.5 | % | 13.3 | % | 13.2 | % | ||||||||
Net income as reported | $ | 85,452 | $ | 68,864 | $ | 156,932 | $ | 129,688 | ||||||||
Special items: | ||||||||||||||||
Rationalization and asset impairment charges (2) | 1,307 | 11,542 | 4,842 | 21,717 | ||||||||||||
Acquisition transaction and integration costs (3) | 1,014 | 788 | 1,804 | 2,695 | ||||||||||||
Pension settlement charges (6) | — | — | — | 758 | ||||||||||||
Amortization of step up in value of acquired inventories (4) | 1,399 | — | 1,399 | — | ||||||||||||
Gains on asset disposals (5) | (3,554 | ) | — | (3,554 | ) | — | ||||||||||
Tax effect of Special items (7) | (4,751 | ) | (784 | ) | (5,564 | ) | (1,165 | ) | ||||||||
Adjusted net income (1) | 80,867 | 80,410 | 155,859 | 153,693 | ||||||||||||
Non-controlling interests in subsidiaries’ loss | (8 | ) | (5 | ) | (22 | ) | (9 | ) | ||||||||
Interest expense, net | 5,898 | 4,812 | 11,221 | 9,253 | ||||||||||||
Income taxes as reported | 18,040 | 25,404 | 39,492 | 48,782 | ||||||||||||
Tax effect of Special items (7) | 4,751 | 784 | 5,564 | 1,165 | ||||||||||||
Adjusted EBIT (1) | $ | 109,548 | $ | 111,405 | $ | 212,114 | $ | 212,884 | ||||||||
Effective tax rate as reported | 17.4 | % | 27.0 | % | 20.1 | % | 27.3 | % | ||||||||
Net special item tax impact | 4.6 | % | (2.4 | %) | 2.3 | % | (2.8 | %) | ||||||||
Adjusted effective tax rate (1) | 22.0 | % | 24.6 | % | 22.4 | % | 24.5 | % | ||||||||
Diluted earnings per share as reported | $ | 1.36 | $ | 1.04 | $ | 2.47 | $ | 1.96 | ||||||||
Special items per share | (0.08 | ) | 0.18 | (0.01 | ) | 0.36 | ||||||||||
Adjusted diluted earnings per share (1) | $ | 1.28 | $ | 1.22 | $ | 2.46 | $ | 2.32 | ||||||||
Weighted average shares (diluted) | 62,970 | 66,121 | 63,419 | 66,257 |
(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 acquisition of Baker Industries, Inc. 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) | 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 three and six months ended June 30, 2019. |
Twelve Months Ended June 30, | ||||||||
Return on Invested Capital | 2019 | 2018 | ||||||
Net income as reported | $ | 314,310 | $ | 259,995 | ||||
Rationalization and asset impairment charges | 8,410 | 28,307 | ||||||
Pension settlement charges | 5,928 | 8,908 | ||||||
Acquisition transaction and integration costs | 3,607 | 9,584 | ||||||
Amortization of step up in value of acquired inventories | 1,399 | 4,578 | ||||||
Gains on asset disposals | (3,554 | ) | — | |||||
Bargain purchase gain | — | (49,650 | ) | |||||
Tax effect of Special items (3) | (11,295 | ) | 21,256 | |||||
Adjusted net income (1) | $ | 318,805 | $ | 282,978 | ||||
Plus: Interest expense, net of tax of $6,178 and $6,077 in 2019 and 2018, respectively | 18,569 | 18,265 | ||||||
Less: Interest income, net of tax of $1,302 and $1,509 in 2019 and 2018, respectively | 3,912 | 4,537 | ||||||
Adjusted net income before tax-effected interest | $ | 333,462 | $ | 296,706 | ||||
Invested Capital | June 30, 2019 | June 30, 2018 | ||||||
Short-term debt | $ | 30,110 | $ | 1,889 | ||||
Long-term debt, less current portion | 710,458 | 700,194 | ||||||
Total debt | 740,568 | 702,083 | ||||||
Total equity | 846,058 | 943,508 | ||||||
Invested capital | $ | 1,586,626 | $ | 1,645,591 | ||||
Return on invested capital (1)(2) | 21.0 | % | 18.0 | % |
(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 June 30, 2019 and net charges of $31,116 related to the U.S. Tax Act in the twelve months ended June 30, 2018. |
Three Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 85,452 | $ | 68,864 | ||||
Non-controlling interests in subsidiaries’ loss | (8 | ) | (5 | ) | ||||
Net income including non-controlling interests | 85,444 | 68,859 | ||||||
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | ||||||||
Rationalization and asset impairment net gains | (355 | ) | (50 | ) | ||||
Depreciation and amortization | 20,351 | 18,189 | ||||||
Equity earnings in affiliates, net | (769 | ) | (839 | ) | ||||
Other non-cash items, net | 1,325 | (654 | ) | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
Decrease in accounts receivable | 5,629 | 561 | ||||||
(Increase) decrease in inventories | (13,129 | ) | 153 | |||||
(Decrease) increase in trade accounts payable | (362 | ) | 1,670 | |||||
Net change in other current assets and liabilities | 28,595 | (9,124 | ) | |||||
Net change in other long-term assets and liabilities | (622 | ) | 1,016 | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 126,107 | 79,781 | ||||||
INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (20,262 | ) | (16,726 | ) | ||||
Acquisition of businesses, net of cash acquired | (107,843 | ) | 356 | |||||
Proceeds from sale of property, plant and equipment | 8,410 | 109 | ||||||
Purchase of marketable securities | — | (129,122 | ) | |||||
Proceeds from marketable securities | — | 126,767 | ||||||
NET CASH USED BY INVESTING ACTIVITIES | (119,695 | ) | (18,616 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Net change in borrowings | 29,980 | 273 | ||||||
Proceeds from exercise of stock options | 323 | 637 | ||||||
Purchase of shares for treasury | (85,330 | ) | (35,508 | ) | ||||
Cash dividends paid to shareholders | (29,541 | ) | (25,589 | ) | ||||
NET CASH USED BY FINANCING ACTIVITIES | (84,568 | ) | (60,187 | ) | ||||
Effect of exchange rate changes on Cash and cash equivalents | 883 | (12,940 | ) | |||||
DECREASE IN CASH AND CASH EQUIVALENTS | (77,273 | ) | (11,962 | ) | ||||
Cash and cash equivalents at beginning of period | 267,134 | 369,056 | ||||||
Cash and cash equivalents at end of period | $ | 189,861 | $ | 357,094 | ||||
Cash dividends paid per share | $ | 0.47 | $ | 0.39 |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 156,932 | $ | 129,688 | ||||
Non-controlling interests in subsidiaries’ loss | (22 | ) | (9 | ) | ||||
Net income including non-controlling interests | 156,910 | 129,679 | ||||||
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | ||||||||
Rationalization and asset impairment net charges | 1,069 | 626 | ||||||
Depreciation and amortization | 39,252 | 36,323 | ||||||
Equity earnings in affiliates, net | (1,217 | ) | (1,377 | ) | ||||
Other non-cash items, net | 5,719 | 6,648 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
Increase in accounts receivable | (21,271 | ) | (39,907 | ) | ||||
Increase in inventories | (27,767 | ) | (27,899 | ) | ||||
(Decrease) increase in trade accounts payable | (15,469 | ) | 4,861 | |||||
Net change in other current assets and liabilities | 13,947 | 12,384 | ||||||
Net change in other long-term assets and liabilities | 812 | 2,220 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 151,985 | 123,558 | ||||||
INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (36,513 | ) | (31,383 | ) | ||||
Acquisition of businesses, net of cash acquired | (107,843 | ) | 6,591 | |||||
Proceeds from sale of property, plant and equipment | 8,712 | 227 | ||||||
Purchase of marketable securities | — | (218,667 | ) | |||||
Proceeds from marketable securities | — | 258,733 | ||||||
Other investing activities | 2,000 | — | ||||||
NET CASH (USED BY) PROVIDED BY INVESTING ACTIVITIES | (133,644 | ) | 15,501 | |||||
FINANCING ACTIVITIES: | ||||||||
Net change in borrowings | 29,977 | 210 | ||||||
Proceeds from exercise of stock options | 960 | 2,599 | ||||||
Purchase of shares for treasury | (160,914 | ) | (50,232 | ) | ||||
Cash dividends paid to shareholders | (60,101 | ) | (51,250 | ) | ||||
NET CASH USED BY FINANCING ACTIVITIES | (190,078 | ) | (98,673 | ) | ||||
Effect of exchange rate changes on Cash and cash equivalents | 2,749 | (9,993 | ) | |||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (168,988 | ) | 30,393 | |||||
Cash and cash equivalents at beginning of period | 358,849 | 326,701 | ||||||
Cash and cash equivalents at end of period | $ | 189,861 | $ | 357,094 | ||||
Cash dividends paid per share | $ | 0.94 | $ | 0.78 |
Americas Welding | International Welding | The Harris Products Group | Corporate / Eliminations | Consolidated | ||||||||||||||||
Three months ended June 30, 2019 | ||||||||||||||||||||
Net sales | $ | 476,607 | $ | 212,306 | $ | 88,095 | $ | — | $ | 777,008 | ||||||||||
Inter-segment sales | 34,811 | 4,188 | 2,113 | (41,112 | ) | — | ||||||||||||||
Total | $ | 511,418 | $ | 216,494 | $ | 90,208 | $ | (41,112 | ) | $ | 777,008 | |||||||||
Net income | $ | 85,452 | ||||||||||||||||||
As a percent of total sales | 11.0 | % | ||||||||||||||||||
EBIT (1) | $ | 83,072 | $ | 17,805 | $ | 13,488 | $ | (4,983 | ) | $ | 109,382 | |||||||||
As a percent of total sales | 16.2 | % | 8.2 | % | 15.0 | % | 14.1 | % | ||||||||||||
Special items charges (gains) (3) | 1,779 | (2,627 | ) | — | 1,014 | 166 | ||||||||||||||
Adjusted EBIT (2) | $ | 84,851 | $ | 15,178 | $ | 13,488 | $ | (3,969 | ) | $ | 109,548 | |||||||||
As a percent of total sales | 16.6 | % | 7.0 | % | 15.0 | % | 14.1 | % | ||||||||||||
Three months ended June 30, 2018 | ||||||||||||||||||||
Net sales | $ | 462,515 | $ | 243,373 | $ | 84,164 | $ | — | $ | 790,052 | ||||||||||
Inter-segment sales | 31,240 | 5,497 | 2,003 | (38,740 | ) | — | ||||||||||||||
Total | $ | 493,755 | $ | 248,870 | $ | 86,167 | $ | (38,740 | ) | $ | 790,052 | |||||||||
Net income | $ | 68,864 | ||||||||||||||||||
As a percent of total sales | 8.7 | % | ||||||||||||||||||
EBIT (1) | $ | 88,158 | $ | 4,734 | $ | 10,157 | $ | (3,974 | ) | $ | 99,075 | |||||||||
As a percent of total sales | 17.9 | % | 1.9 | % | 11.8 | % | 12.5 | % | ||||||||||||
Special items charges (gains) (4) | — | 11,542 | — | 788 | 12,330 | |||||||||||||||
Adjusted EBIT (2) | $ | 88,158 | $ | 16,276 | $ | 10,157 | $ | (3,186 | ) | $ | 111,405 | |||||||||
As a percent of total sales | 17.9 | % | 6.5 | % | 11.8 | % | 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 2019 reflect Rationalization and asset impairment charges of $380 in Americas Welding and $927 in International Welding, amortization of step up in value of acquired inventories of $1,399 in Americas Welding, gains on disposals of assets of $3,554 in International Welding and acquisition transaction and integration costs of $1,014 in Corporate/Eliminations related to the acquisition of Air Liquide Welding. |
(4) | Special items in 2018 reflect rationalization and asset impairment charges of $11,542 in International Welding. Special items in 2018 also reflect acquisition transaction and integration costs of $788 in Corporate/Eliminations related to the acquisition of Air Liquide Welding. |
Americas Welding | International Welding | The Harris Products Group | Corporate / Eliminations | Consolidated | ||||||||||||||||
Six months ended June 30, 2019 | ||||||||||||||||||||
Net sales | $ | 934,326 | $ | 430,392 | $ | 171,464 | $ | — | $ | 1,536,182 | ||||||||||
Inter-segment sales | 64,199 | 8,397 | 3,980 | (76,576 | ) | — | ||||||||||||||
Total | $ | 998,525 | $ | 438,789 | $ | 175,444 | $ | (76,576 | ) | $ | 1,536,182 | |||||||||
Net income | $ | 156,932 | ||||||||||||||||||
As a percent of total sales | 10.2 | % | ||||||||||||||||||
EBIT (1) | $ | 163,488 | $ | 28,943 | $ | 24,007 | $ | (8,815 | ) | $ | 207,623 | |||||||||
As a percent of total sales | 16.4 | % | 6.6 | % | 13.7 | % | 13.5 | % | ||||||||||||
Special items charges (gains) (3) | 3,115 | (428 | ) | — | 1,804 | 4,491 | ||||||||||||||
Adjusted EBIT (2) | $ | 166,603 | $ | 28,515 | $ | 24,007 | $ | (7,011 | ) | $ | 212,114 | |||||||||
As a percent of total sales | 16.7 | % | 6.5 | % | 13.7 | % | 13.8 | % | ||||||||||||
Six months ended June 30, 2018 | ||||||||||||||||||||
Net sales | $ | 897,287 | $ | 490,693 | $ | 159,768 | $ | — | $ | 1,547,748 | ||||||||||
Inter-segment sales | 57,826 | 10,006 | 3,910 | (71,742 | ) | — | ||||||||||||||
Total | $ | 955,113 | $ | 500,699 | $ | 163,678 | $ | (71,742 | ) | $ | 1,547,748 | |||||||||
Net income | $ | 129,688 | ||||||||||||||||||
As a percent of total sales | 8.4 | % | ||||||||||||||||||
EBIT (1) | $ | 164,839 | $ | 9,532 | $ | 19,382 | $ | (6,039 | ) | $ | 187,714 | |||||||||
As a percent of total sales | 17.3 | % | 1.9 | % | 11.8 | % | 12.1 | % | ||||||||||||
Special items charges (gains) (4) | 758 | 21,717 | — | 2,695 | 25,170 | |||||||||||||||
Adjusted EBIT (2) | $ | 165,597 | $ | 31,249 | $ | 19,382 | $ | (3,344 | ) | $ | 212,884 | |||||||||
As a percent of total sales | 17.3 | % | 6.2 | % | 11.8 | % | 13.8 | % |
(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 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding and $3,126 in International Welding, amortization of step up in value of acquired inventories of $1,399 in Americas Welding, gains on disposals of assets of $3,554 in International Welding 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 $758 in Americas Welding, rationalization and asset impairment charges of $21,717 in International Welding and acquisition transaction and integration costs of $2,695 in Corporate/Eliminations related to the acquisition of Air Liquide Welding. |
Three Months Ended June 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 | $ | 462,515 | $ | (16,756 | ) | $ | 21,512 | $ | 11,599 | $ | (2,263 | ) | $ | 476,607 | ||||||||||
International Welding | 243,373 | (23,550 | ) | — | 2,837 | (10,354 | ) | 212,306 | ||||||||||||||||
The Harris Products Group | 84,164 | (417 | ) | 5,656 | (635 | ) | (673 | ) | 88,095 | |||||||||||||||
Consolidated | $ | 790,052 | $ | (40,723 | ) | $ | 27,168 | $ | 13,801 | $ | (13,290 | ) | $ | 777,008 | ||||||||||
% Change | ||||||||||||||||||||||||
Americas Welding | (3.6 | %) | 4.7 | % | 2.5 | % | (0.5 | %) | 3.0 | % | ||||||||||||||
International Welding | (9.7 | %) | — | 1.2 | % | (4.3 | %) | (12.8 | %) | |||||||||||||||
The Harris Products Group | (0.5 | %) | 6.7 | % | (0.8 | %) | (0.8 | %) | 4.7 | % | ||||||||||||||
Consolidated | (5.2 | %) | 3.4 | % | 1.7 | % | (1.7 | %) | (1.7 | %) | ||||||||||||||
Six Months Ended June 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 | $ | 897,287 | $ | (29,151 | ) | $ | 34,232 | $ | 39,027 | $ | (7,069 | ) | $ | 934,326 | ||||||||||
International Welding | 490,693 | (41,467 | ) | — | 9,312 | (28,146 | ) | 430,392 | ||||||||||||||||
The Harris Products Group | 159,768 | 2,544 | 11,430 | (185 | ) | (2,093 | ) | 171,464 | ||||||||||||||||
Consolidated | $ | 1,547,748 | $ | (68,074 | ) | $ | 45,662 | $ | 48,154 | $ | (37,308 | ) | $ | 1,536,182 | ||||||||||
% Change | ||||||||||||||||||||||||
Americas Welding | — | % | (3.2 | %) | 3.8 | % | 4.3 | % | (0.8 | %) | 4.1 | % | ||||||||||||
International Welding | (8.5 | %) | — | 1.9 | % | (5.7 | %) | (12.3 | %) | |||||||||||||||
The Harris Products Group | 1.6 | % | 7.2 | % | (0.1 | %) | (1.3 | %) | 7.3 | % | ||||||||||||||
Consolidated | (4.4 | %) | 3.0 | % | 3.1 | % | (2.4 | %) | (0.7 | %) | ||||||||||||||