EX-99.1 2 l31131aexv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
Media Contact: Roy L. Morrow (216) 383-4893
Roy_Morrow@lincolnelectric.com
Investors Contact: Joseph P. Kelley (216) 383-8346
Joe_Kelley@lincolnelectric.com
LINCOLN ELECTRIC REPORTS RECORD
2008 FIRST QUARTER FINANCIAL RESULTS
  •   First quarter sales increased 13.0% to $620.2 million
 
  •   First quarter operating income increased 14.9% to $78.5 million
 
  •   First quarter net income increased 11.4% to $53.5 million
 
  •   First quarter diluted earnings per share increased 11.7% to $1.24
 
  •   First quarter net cash provided by operating activities increased 59.5% to $67.5 million
          CLEVELAND, Ohio, U.S.A., April 23, 2008 — Lincoln Electric Holdings, Inc. (the “Company”) (NASDAQ: LECO) today reported record 2008 first quarter operating income, increasing 14.9% to $78.5 million from $68.3 million in 2007, on a sales increase of 13.0%. Net income for the first quarter increased 11.4% to $53.5 million, or $1.24 per diluted share from $48.0 million, or $1.11 per diluted share in 2007. The 2008 first quarter effective tax rate was 32.3% compared with 30.4% in 2007.
          Sales for the first quarter increased 13.0% to $620.2 million from $549.0 million in the comparable period of 2007. Sales for the Company’s North American operations were $371.1 million in the quarter versus $345.7 million in the comparable quarter last year, an increase of 7.3%. U.S. export sales in the quarter increased 29.5% to $61.6 million from $47.5 million in 2007.
          “We had an excellent start to 2008, with strong sales, profitability and cash flow”, said John M. Stropki, Chairman and Chief Executive Officer. “Despite a very volatile economic environment, and rising commodity costs, we were able to continue to leverage the strengths of our strong global market position. We remain focused on executing our long-term strategy despite softening in the industrial economic outlook by continuing to capitalize on key infrastructure development opportunities, and expanding our value-driven welding product and service offering.”
          Sales at Lincoln subsidiaries outside North America increased to $249.1 million in the first quarter, compared with $203.3 million in the year ago quarter. In local currencies, international subsidiaries’ sales increased 9.3%.
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Lincoln Electric Reports Record 2008 First Quarter Financial Results
          Net cash provided by operating activities increased 59.5% to $67.5 million in the first quarter compared with $42.3 million for the comparable period in 2007. During the first quarter 2008, the Company paid $10.7 million in dividends. The Company’s Board of Directors declared a quarterly cash dividend of $0.25, which was paid on April 15, 2008 to holders of record as of March 31, 2008.
          The Company announced on April 7, 2008, the acquisition of Electro-Arco, S.A. (“Electro-Arco”), a privately held manufacturer of welding consumables headquartered near Lisbon, Portugal. Founded over 70 years ago, Electro-Arco has been continuously owned and operated by the Rodrigues family. Electro-Arc has forged a leading position in the Portuguese welding market and has grown to be a significant exporter to markets throughout Europe. Electro-Arco has sales of approximately $40 million and 165 employees.
          “This acquisition significantly expands our European consumables manufacturing capacity and widens our commercial presence in Western Europe,” said Mr. Stropki.
          Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc-welding systems, plasma and oxyfuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 38 manufacturing locations, including operations, manufacturing alliances and joint ventures in 20 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric, its products and services, visit the Company’s website at http://www.lincolnelectric.com.
          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. 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: the effectiveness of operating initiatives; currency exchange and interest rates; adverse outcome of pending or potential litigation; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of international terrorism and hostilities 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.
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Lincoln Electric Reports Record 2008 First Quarter Financial Results
          A conference call to discuss first quarter 2008 results is scheduled for today, Wednesday, April 23, 2008 at 10:00 a.m. Eastern Time. An audio webcast of the call is accessible through the investor tab on the Company’s website at http://www.lincolnelectric.com.
          The 2008 Annual Meeting of Shareholders of Lincoln Electric Holdings, Inc. will be held at 11:30 a.m. Eastern Time on Friday, April 25, 2008 at the Marriott Cleveland East, 26300 Harvard Road, Warrensville Heights, Ohio.
#2008-423#

 

 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Income
                                                 
    Three Months Ended March 31,     Fav (Unfav) to Prior Year  
    2008     % of Sales     2007     % of Sales     $     %  
Net sales
   $ 620,227       100.0 %   $ 549,043       100.0 %   $ 71,184       13.0 %
Cost of goods sold
     442,776       71.4 %     390,827       71.2 %     (51,949 )     (13.3 %)
 
                                          
Gross profit
     177,451       28.6 %     158,216       28.8 %     19,235       12.2 %
Selling, general & administrative expenses
     98,961       16.0 %     89,520       16.3 %     (9,441 )     (10.5 %)
Rationalization charges
     —       NA       396       0.1 %     396     NA  
 
                                          
Operating income
     78,490       12.7 %     68,300       12.4 %     10,190       14.9 %
Interest income
     2,434       0.4 %     1,450       0.3 %     984       67.9 %
Equity earnings in affiliates
     549       0.1 %     1,478       0.3 %     (929 )     (62.9 %)
Other income
     499       0.1 %     464       0.1 %     35       7.5 %
Interest expense
     (2,981 )     (0.5 %)     (2,727 )     (0.5 %)     (254 )     (9.3 %)
 
                                          
Income before income taxes
     78,991       12.7 %     68,965       12.6 %     10,026       14.5 %
Income taxes
     25,514       4.1 %     20,965       3.8 %     (4,549 )     (21.7 %)
 
                                          
Effective tax rate
     32.3 %             30.4 %             (1.9 %)        
 
                                          
Net income (1)
   $ 53,477       8.6 %   $ 48,000       8.7 %   $ 5,477       11.4 %
 
                                          
Reconciliation of Net Income as Reported to Adjusted Net Income
Excluding Non-Recurring Items:
                                 
    Three Months Ended March 31,     Change  
    2008     2007     $     %  
Net income as reported (1)
   $ 53,477     $ 48,000     $ 5,477       11.4 %
Non-recurring items:
                                
European rationalization charges (after-tax)
     —       396       (396 )   NA  
 
 
                        
Adjusted net income excluding non-recurring items (2)
   $ 53,477     $ 48,396     $ 5,081       10.5 %
 
                          
 
                                
Basic earnings per share
   $ 1.25     $ 1.12     $ 0.13       11.6 %
Non-recurring items (1)
     —       0.01       (0.01 )   NA  
 
                          
Basic earnings per share excluding non-recurring items (2)
   $ 1.25     $ 1.13     $ 0.12       10.6 %
 
                          
 
                                
Diluted earnings per share
   $ 1.24     $ 1.11     $ 0.13       11.7 %
Non-recurring items (1)
     —       0.01       (0.01 )   NA  
 
                          
Diluted earnings per share excluding non-recurring items(2)
  $ 1.24     $ 1.12     $ 0.12       10.7 %
 
                          
 
                                
Weighted average shares (basic)
     42,675       42,843                  
Weighted average shares (diluted)
     43,090       43,349                  
 
(1)   Net income includes a charge of $396 ($396 after-tax) in 2007 related to European rationalization actions.
 
(2)   Adjusted net income excluding non-recurring items and basic and diluted earnings per share excluding non-recurring items, non-GAAP financial measures, are presented as management believes these financial measures are important to investors to evaluate and compare the Company’s financial performance from period to period. Management uses this information in assessing and evaluating the Company’s underlying operating performance.

 

 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Balance Sheet Highlights
Selected Consolidated Balance Sheet Data
                 
    March 31,   December 31,
    2008   2007
Cash and cash equivalents
   $ 237,853     $ 217,382  
Total current assets
     1,082,642       969,648  
Property, plant and equipment, net
     443,036       429,944  
Total assets
     1,795,651       1,645,296  
 
                
Total current liabilities
     417,281       311,921  
Short-term debt
     42,570       12,486  
Long-term debt
     90,704       117,329  
Total shareholders’ equity
     1,142,526       1,087,220  
Net Operating Working Capital
                 
    March 31,     December 31,  
    2008     2007  
Trade accounts receivable
   $ 390,656     $ 344,058  
 
                
Inventory
     381,800       343,849  
 
                
Trade accounts payable
     193,078       152,301  
 
                
 
            
Net operating working capital
   $ 579,378     $ 535,606  
 
            
 
                
Net operating working capital % to net sales
     24.6 %     23.5 %
 
            
Invested Capital
                 
    March 31,     December 31,  
    2008     2007  
Short-term debt
   $ 42,570     $ 12,486  
Long-term debt
     90,704       117,329  
 
            
Total debt
     133,274       129,815  
Equity
     1,142,526       1,087,220  
 
            
Total
   $ 1,275,800     $ 1,217,035  
 
            
 
                
Total debt/capitalization
     10.4 %     10.7 %
Return on invested capital
     20.2 %     20.5 %

 

 

       
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Three Months Ended March 31,  
    2008     2007  
OPERATING ACTIVITIES:
                
Net income
   $ 53,477     $ 48,000  
 
                
Adjustments to reconcile net income to net cash provided by operating activities:
                
Rationalization charges
     —       396  
Depreciation and amortization
     13,907       12,511  
Equity losses (earnings) of affiliates, net
     4       (1,134 )
Other non-cash items, net
     3,816       (2,677 )
Changes in operating assets and liabilities net of effects from acquisitions:
                
Increase in accounts receivable
     (37,174 )     (35,734 )
Increase in inventories
     (26,970 )     (18,116 )
Increase in accounts payable
     31,172       15,281  
Net change in other current assets and liabilities
     31,765       29,021  
Net change in other long-term assets and liabilities
     (2,474 )     (5,205 )
 
            
NET CASH PROVIDED BY OPERATING ACTIVITIES
     67,523       42,343  
 
                
INVESTING ACTIVITIES:
                
Capital expenditures
     (12,812 )     (15,724 )
Acquisition of businesses, net of cash acquired
     (8,675 )     (4,362 )
Proceeds from sale of property, plant and equipment
     272       73  
 
            
NET CASH USED BY INVESTING ACTIVITIES
     (21,215 )     (20,013 )
 
                
FINANCING ACTIVITIES:
                
Net change in borrowings
     (1,095 )     (41,720 )
Proceeds from exercise of stock options
     1,591       2,426  
Tax benefit from the exercise of stock options
     819       496  
Purchase of shares for treasury
     (18,033 )     —  
Cash dividends paid to shareholders
     (10,720 )     (9,403 )
 
            
NET CASH USED BY FINANCING ACTIVITIES
     (27,438 )     (48,201 )
 
                
Effect of exchange rate changes on cash and cash equivalents
     1,601       195  
 
            
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     20,471       (25,676 )
Cash and cash equivalents at beginning of the period
     217,382       120,212  
 
            
Cash and cash equivalents at end of period
   $ 237,853     $ 94,536  
 
            
 
                
Cash dividends paid per share
   $ 0.25     $ 0.22