Second Quarter 2016 Key Metric Highlights
•Sales declined 10.9% primarily due to lower volumes
•Operating income margin of 8.1%, Adjusted operating income margin of 13.9%
•Returned $122 million to shareholders through dividends and share repurchases
•Deconsolidated the Venezuelan subsidiary and recorded a $34.3 million pretax charge ($34.1 million non-cash)  
  
  

CLEVELAND, July 25, 2016 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq:LECO) today reported second quarter 2016 net income of $31.3 million, or diluted earnings per share (EPS) of $0.45 which includes a $7.2 million or $0.10 EPS benefit due to the reversal of an income tax valuation allowance and a $33.3 million, or $0.48 EPS charge from the deconsolidation of the Venezuelan subsidiary.  This compares with net income of $70.9 million, or EPS of $0.94 in the comparable 2015 period.  Adjusted net income for the three months ended June 30, 2016 was $57.4 million, or adjusted EPS of $0.83 reflecting the impact of lower volumes.  This compares with adjusted net income of $71.8 million, or adjusted EPS of $0.95, in 2015.

Second quarter 2016 sales decreased 10.9% to $592.4 million.  The decrease reflects a 32.6% decline from unfavorable foreign exchange translation and lower volumes of 9.7% being partially offset by a 28.4% benefit from price and a 3.0% increase from acquisitions.  Excluding Venezuela, price declined 0.9% and foreign exchange translation had a 1.5% unfavorable impact.  Operating income for the second quarter 2016 was $48.1 million, or 8.1% of sales, as compared with $96.8 million, or 14.6% of sales, in the comparable 2015 period.  The decline was primarily due to the loss associated with the Venezuelan deconsolidation.  On an adjusted basis, operating income was $82.4 million, or 13.9% of sales as compared with $98.0 million or 14.7% in the comparable 2015 period.  Margin performance, excluding the loss related to the deconsolidation, reflects the benefits of cost reduction actions implemented to mitigate lower volumes.

“We continued to execute well in the second quarter with solid margin and cash flow performance and returned $122 million to shareholders,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. “While we have yet to see sustained improvement in industrial demand across all of our businesses, we continue to invest for long-term, profitable growth with a broad range of product launches, operational excellence initiatives and interim cost control measures to maximize shareholder value through the economic cycle.”

Six Months 2016 Summary

Net income for the six months ended June 30, 2016 was $85.0 million, or EPS of $1.22 which includes the impact of the special items noted above.  This compares with net income of $139.3 million, or EPS of $1.82, in the comparable 2015 period.  Adjusted net income for the six months ended June 30, 2016 was $111.0 million, or adjusted EPS of $1.60, compared with adjusted net income of $140.2 million, or adjusted EPS of $1.83, in 2015.

Sales decreased 13.6% to $1.1 billion in the six months ended June 30, 2016 primarily due to unfavorable foreign exchange translation and lower volumes.  This compares with $1.3 billion in sales in the comparable 2015 period.  Operating income for the six months ended June 30, 2016 decreased to $123.4 million, or 10.8% of sales, as compared with $187.3 million, or 14.2% of sales, in the comparable 2015 period.  Adjusted operating income was $157.7 million or 13.8% of sales, compared with $188.5 million, or 14.3% of sales in 2015.

Venezuela Deconsolidation

Effective June 30, 2016, the Company deconsolidated the financial statements of its Venezuelan subsidiary and began reporting its results using the cost method of accounting.  As a result, the Company recorded a $34.3 million pretax charge ($34.1 million non-cash), or $33.3 million after-tax in the second quarter of 2016.  The Company maintains its commitment to ongoing operations in the country and future income from the Venezuelan subsidiary will be recorded if cash is received.

Dividend and Share Repurchases

The Company’s Board of Directors declared a quarterly cash dividend of $0.32 per share, which was paid on July 15, 2016 to shareholders of record as of June 30, 2016.      

During the second quarter, the Company returned $122.5 million to shareholders through dividends and the repurchase of 1.7 million of the Company’s common shares.  The Company is maintaining its 2016 share repurchase target of $400 million of the Company’s common shares.

Financing Activities

During July 2016, the Company committed to pricing on private placement debt in the aggregate principal amount of $350.0 million.  The debt will have maturities ranging from 12 to 25 years and a weighted average effective interest rate of 3.1%, excluding accretion of original issuance costs.  The commitment is expected to be finalized and proceeds received during the fourth quarter of 2016.  The proceeds will be used for general corporate purposes.

Webcast Information

A conference call to discuss second quarter 2016 financial results will be webcast live today, July 25, 2016, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://ir.lincolnelectric.com.  Listeners should go to the web site prior to the call to register, download and install any necessary audio software.  A replay of the webcast will be available on the Company's web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 41918263.  Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the second quarter 2016 can also be obtained at http://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market.  Headquartered in Cleveland, Ohio, Lincoln has 48 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.  For more information about Lincoln Electric and its products and services, visit the Company’s website at http://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted diluted earnings per share 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.
 
Forward-Looking Statements

The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements reflect management’s current expectations and involve a number of risks and uncertainties.  Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning.  Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results.  The factors include, but are not limited to: general economic and market conditions; the effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, on the Company or its customers, suppliers and the economy in general.  For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

 
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts) (Unaudited)
 
Consolidated Statements of Income
 
  Three Months Ended June 30, Fav (Unfav) to Prior Year
  2016 % of Sales 2015 % of Sales $ %
Net sales $592,418  100.0% $664,740  100.0% $(72,322) (10.9%)
Cost of goods sold 389,491  65.7% 438,959  66.0% 49,468  11.3%
Gross profit 202,927  34.3% 225,781  34.0% (22,854) (10.1%)
Selling, general & administrative expenses 120,497  20.3% 127,755  19.2% 7,258  5.7%
Rationalization and asset impairment charges —  —  1,239  0.2% 1,239  100.0%
Loss on deconsolidation of Venezuelan subsidiary 34,348  5.8% —  —  (34,348) (100.0%)
Operating income 48,082  8.1% 96,787  14.6% (48,705) (50.3%)
Interest income 435  0.1% 738  0.1% (303) (41.1%)
Equity earnings in affiliates 839  0.1% 979  0.1% (140) (14.3%)
Other income 588  0.1% 317  —  271  85.5%
Interest expense (4,186) (0.7%) (4,387) (0.7%) 201  4.6%
Income before income taxes 45,758  7.7% 94,434  14.2% (48,676) (51.5%)
Income taxes 14,449  2.4% 23,558  3.5% 9,109  38.7%
Effective tax rate 31.6%   24.9%   (6.7%)  
Net income including non-controlling interests 31,309  5.3% 70,876  10.7% (39,567) (55.8%)
Non-controlling interests in subsidiaries’ loss (8) —  (22) —  14  63.6%
Net income $31,317  5.3% $70,898  10.7% $(39,581) (55.8%)
             
Basic earnings per share $0.46    $0.95    $(0.49) (51.6%)
Diluted earnings per share $0.45    $0.94    $(0.49) (52.1%)
Weighted average shares (basic) 68,181    75,000       
Weighted average shares (diluted) 68,890    75,773       
  Six months ended June 30th, Fav (Unfav) to Prior Year
  2016 % of Sales 2015 % of Sales $ %
Net sales $1,143,140  100.0% $1,322,640  100.0% $(179,500) (13.6%)
Cost of goods sold 751,111  65.7% 876,469  66.3% 125,358  14.3%
Gross profit 392,029  34.3% 446,171  33.7% (54,142) (12.1%)
Selling, general & administrative expenses 234,307  20.5% 257,646  19.5% 23,339  9.1%
Rationalization and asset impairment charges —  —  1,239  0.1% 1,239  100.0%
Loss on deconsolidation of Venezuelan subsidiary 34,348  3.0% —  —  (34,348) (100.0%)
Operating income 123,374  10.8% 187,286  14.2% (63,912) (34.1%)
Interest income 865  0.1% 1,331  0.1% (466) (35.0%)
Equity earnings in affiliates 1,465  0.1% 1,828  0.1% (363) (19.9%)
Other income 1,249  0.1% 2,927  0.2% (1,678) (57.3%)
Interest expense (8,013) (0.7%) (6,231) (0.5%) (1,782) (28.6%)
Income before income taxes 118,940  10.4% 187,141  14.1% (68,201) (36.4%)
Income taxes 34,007  3.0% 47,947  3.6% 13,940  29.1%
Effective tax rate 28.6%   25.6%   (3.0%)  
Net income including non-controlling interests 84,933  7.4% 139,194  10.5% (54,261) (39.0%)
Non-controlling interests in subsidiaries’ loss (22) —  (58) —  36  62.1%
Net income $84,955  7.4% $139,252  10.5% $(54,297) (39.0%)
             
Basic earnings per share $1.23    $1.84    $(0.61) (33.2%)
Diluted earnings per share $1.22    $1.82    $(0.60) (33.0%)
Weighted average shares (basic) 68,883    75,621       
Weighted average shares (diluted) 69,569    76,416       
               


 
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
 
Balance Sheet Highlights    
     
Selected Consolidated Balance Sheet Data June 30, 2016 December 31, 2015
Cash and cash equivalents $237,019  $304,183 
Total current assets 921,618  935,995 
Property, plant and equipment, net 383,867  411,323 
Total assets 1,837,401  1,784,171 
Total current liabilities 559,790  370,122 
Short-term debt (1) 159,908  4,278 
Long-term debt 360,931  350,347 
Total equity 792,414  932,448 
     
Operating Working Capital June 30, 2016 December 31, 2015
Accounts receivable $291,645  $264,715 
Inventory 292,587  275,930 
Trade accounts payable 173,037  152,620 
Operating working capital $411,195  $388,025 
     
Operating working capital to net sales (2) 17.4% 17.1%
     
Invested Capital June 30, 2016 December 31, 2015
Short-term debt (1) $159,908  $4,278 
Long-term debt 360,931  350,347 
Total debt 520,839  354,625 
Total equity 792,414  932,448 
Invested capital $1,313,253  $1,287,073 
     
Total debt / invested capital 39.7% 27.6%


 (1)Includes current portion of long-term debt.
 (2)Operating working capital to net sales is defined as operating working capital 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 June 30, Six Months Ended June 30,
  2016 2015 2016 2015
Operating income as reported $48,082  $96,787  123,374  187,286 
Special items (pre-tax):        
Rationalization and asset impairment charges (1) —  1,239  —  1,239 
Loss on deconsolidation of Venezuelan subsidiary (2) 34,348  —  34,348  — 
Adjusted operating income (4) $82,430  $98,026  $157,722  $188,525 
As a percent of total sales 13.9% 14.7% 13.8% 14.3%
         
Net income as reported $31,317  $70,898  $84,955  $139,252 
Special items (after-tax):        
Rationalization and asset impairment charges (1) —  900  —  900 
Loss on deconsolidation of Venezuelan subsidiary (2) 33,251  —  33,251  — 
Income tax valuation reversals (3) (7,196) —  (7,196) — 
Adjusted net income (4) $57,372  $71,798  $111,010  $140,152 
         
Diluted earnings per share as reported $0.45  $0.94  $1.22  $1.82 
Special items 0.38  0.01  0.38  0.01 
Adjusted diluted earnings per share (4) $0.83  $0.95  $1.60  $1.83 
         
Weighted average shares (diluted) 68,890  75,773  69,569  76,416 


 (1)The three and six months ended June 30, 2015 include net charges primarily related to severance and other related costs.
 (2)The three and six months ended June 30, 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 in the second quarter 2016.
 (3)The three and six months ended June 30, 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.
 (4)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.
  


 
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
   
Non-GAAP Financial Measures  
   
  Twelve Months Ended June 30,
Return on Invested Capital 2016 2015
Net income as reported $73,181  $260,153 
Rationalization and asset impairment charges (gains), net of tax of $1,437 and ($651) in 2016 and 2015, respectively 17,281  31,122 
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 currency devaluation 27,214  — 
Noncontrolling interest —  (805)
Adjusted net income (1) $231,041  $290,470 
Plus: Interest expense, net of tax of $9,038 and $5,402 in 2016 and 2015, respectively 14,568  8,707 
Less: Interest income, net of tax of $861 and $990 in 2016 and 2015, respectively 1,387  1,595 
Adjusted net income before tax effected interest $244,222  $297,582 
     
Invested Capital June 30, 2016 June 30, 2015
Short-term debt $159,908  $62,595 
Long-term debt 360,931  151,563 
Total debt 520,839  214,158 
Total equity 792,414  1,196,658 
Invested capital $1,313,253  $1,410,816 
     
Return on invested capital (1)(2) 18.6% 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.
  


 
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows
   
  Three Months Ended June 30,
  2016 2015
OPERATING ACTIVITIES:    
Net income $31,317  $70,898 
Non-controlling interests in subsidiaries’ loss (8) (22)
Net income including non-controlling interests 31,309  70,876 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Loss on deconsolidation of Venezuelan subsidiary 34,348  — 
Depreciation and amortization 16,607  15,686 
Equity earnings in affiliates, net (56) (272)
Pension expense 5,112  4,925 
Pension contributions and payments (712) (26,471)
Other non-cash items, net (3,316) 12,772 
Changes in operating assets and liabilities, net of effects from acquisitions:    
(Increase) decrease in accounts receivable (5,801) 11,695 
(Increase) decrease in inventories (4,712) 17,773 
Increase (decrease) in trade accounts payable 17,571  (18,301)
Net change in other current assets and liabilities 10,918  (11,234)
Net change in other long-term assets and liabilities (272) (163)
NET CASH PROVIDED BY OPERATING ACTIVITIES 100,996  77,286 
     
INVESTING ACTIVITIES:    
Capital expenditures (15,894) (16,761)
Acquisition of businesses, net of cash acquired (71,567) — 
Proceeds from sale of property, plant and equipment 221  234 
Other investing activities (283) — 
NET CASH USED BY INVESTING ACTIVITIES (87,523) (16,527)
     
FINANCING ACTIVITIES:    
Net change in borrowings 137,514  42,540 
Proceeds from exercise of stock options 3,700  2,303 
Excess tax benefits from stock-based compensation 1,165  756 
Purchase of shares for treasury (100,445) (55,615)
Cash dividends paid to shareholders (22,022) (21,919)
Other financing activities (14,438) (7,976)
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES 5,474  (39,911)
     
Effect of exchange rate changes on Cash and cash equivalents (2,924) 2,872 
INCREASE IN CASH AND CASH EQUIVALENTS 16,023  23,720 
Cash and cash equivalents at beginning of period 220,996  289,017 
Cash and cash equivalents at end of period $237,019  $312,737 
     
Cash dividends paid per share $0.32  $0.29 
         


 
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows Six Months Ended June 30,
  2016 2015
OPERATING ACTIVITIES:    
Net income $84,955  $139,252 
Non-controlling interests in subsidiaries’ loss (22) (58)
Net income including non-controlling interests 84,933  139,194 
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:    
Rationalization and asset impairment charges —  30 
Loss on deconsolidation of Venezuelan subsidiary 34,348  — 
Depreciation and amortization 32,232  31,718 
Equity earnings in affiliates, net (58) (488)
Pension expense 9,256  10,604 
Pension contributions and payments (21,577) (47,705)
Other non-cash items, net (5,395) (5,790)
Changes in operating assets and liabilities, net of effects from acquisitions:    
Increase in accounts receivable (22,393) (13,682)
(Increase) decrease in inventories (15,492) 1,540 
Increase (decrease) in trade accounts payable 22,228  (31,217)
Net change in other current assets and liabilities (1) 8,007  43,835 
Net change in other long-term assets and liabilities (732) 2,031 
NET CASH PROVIDED BY OPERATING ACTIVITIES 125,357  130,070 
     
INVESTING ACTIVITIES:    
Capital expenditures (24,779) (29,217)
Acquisition of businesses, net of cash acquired (71,567) — 
Proceeds from sale of property, plant and equipment 679  1,421 
Other investing activities (283) 2,024 
NET CASH USED BY INVESTING ACTIVITIES (95,950) (25,772)
     
FINANCING ACTIVITIES:    
Net change in borrowings 159,270  144,050 
Proceeds from exercise of stock options 5,715  4,036 
Excess tax benefits from stock-based compensation 1,522  1,293 
Purchase of shares for treasury (202,933) (158,468)
Cash dividends paid to shareholders (44,647) (44,248)
Other financing activities (18,244) (7,996)
NET CASH USED BY FINANCING ACTIVITIES (99,317) (61,333)
     
Effect of exchange rate changes on Cash and cash equivalents 2,746  (8,607)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (67,164) 34,358 
Cash and cash equivalents at beginning of period 304,183  278,379 
Cash and cash equivalents at end of period $237,019  $312,737 
     
Cash dividends paid per share $0.64  $0.58 


 (1)Net change in other current assets and liabilities in 2015 includes the receipt of a $25 million tax refund.
  


 
Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)
 
  Americas
Welding		 International
Welding		 The Harris
Products
Group		 Corporate /
Eliminations		 Consolidated
Three months ended June 30, 2016        
Net sales $388,372  $132,815  $71,231  $—  $592,418 
Inter-segment sales 23,456  3,841  2,824  (30,121) — 
Total $411,828  $136,656  $74,055  $(30,121) $592,418 
           
EBIT (2) $65,201  $9,670  $9,284  $(34,646) $49,509 
As a percent of total sales 15.8% 7.1% 12.5%   8.4%
Special items charge (3) —  —  —  34,348  34,348 
Adjusted EBIT (4) $65,201  $9,670  $9,284  $(298) $83,857 
As a percent of total sales 15.8% 7.1% 12.5%   14.2%
Three months ended June 30, 2015        
Net sales $451,001  $141,927  $71,812  $—  $664,740 
Inter-segment sales 23,902  5,311  2,716  (31,929) — 
Total $474,903  $147,238  $74,528  $(31,929) $664,740 
           
EBIT (2) $79,421  $9,778  $8,250  $634  $98,083 
As a percent of total sales 16.7% 6.6% 11.1%   14.8%
Special items charge (3) —  1,239  —  —  1,239 
Adjusted EBIT (4) $79,421  $11,017  $8,250  $634  $99,322 
As a percent of total sales 16.7% 7.5% 11.1%   14.9%
Six months ended June 30, 2016        
Net sales $747,380  $257,120  $138,640  $—  $1,143,140 
Inter-segment sales 47,287  8,267  5,127  (60,681) — 
Total $794,667  $265,387  $143,767  $(60,681) $1,143,140 
           
EBIT (2) $126,639  $15,903  $16,995  $(33,449) $126,088 
As a percent of total sales 15.9% 6.0% 11.8%   11.0%
Special items charge (3) $—  $—  $—  $34,348  $34,348 
Adjusted EBIT (4) $126,639  $15,903  $16,995  $899  $160,436 
As a percent of total sales 15.9% 6.0% 11.8%   14.0%
Six months ended June 30, 2015        
Net sales $899,838  $281,174  $141,628  $—  $1,322,640 
Inter-segment sales 46,925  10,338  4,727  (61,990) — 
Total $946,763  $291,512  $146,355  $(61,990) $1,322,640 
           
EBIT (2) $154,836  $20,712  $15,799  $694  $192,041 
As a percent of total sales 16.4% 7.1% 10.8%   14.5%
Special items charge (3) $—  $1,239  $—  $—  $1,239 
Adjusted EBIT (4) $154,836  $21,951  $15,799  $694  $193,280 
As a percent of total sales 16.4% 7.5% 10.8%   14.6%


 (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 during the three and six months ended June 30, 2016 reflect a charge ($34.1 million non-cash) related to the deconsolidation of the Company's Venezuelan subsidiary in the second quarter 2016.
 (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.
  
  


Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)
 
Three Months Ended June 30th 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 $451,001  $(59,999) $16,323  $193,706  $(212,659) $388,372 
International Welding 141,927  (5,112) 3,702  (3,883) (3,819) 132,815 
The Harris Products Group 71,812  736  —  (809) (508) 71,231 
Consolidated $664,740  $(64,375) $20,025  $189,014  $(216,986) $592,418 
             
Americas Welding (excluding Venezuela) $427,649  $(55,013) 16,323  $(1,071) $(5,349) $382,539 
Consolidated (excluding Venezuela) $641,389  $(59,389) $20,025  $(5,764) $(9,676) $586,585 
             
% Change            
Americas Welding   (13.3%) 3.6% 43.0% (47.2%) (13.9%)
International Welding   (3.6%) 2.6% (2.7%) (2.7%) (6.4%)
The Harris Products Group   1.0% —  (1.1%) (0.7%) (0.8%)
Consolidated   (9.7%) 3.0% 28.4% (32.6%) (10.9%)
              
Americas Welding (excluding Venezuela) (12.9%) 3.8% (0.3%) (1.3%) (10.5%)
Consolidated (excluding Venezuela) (9.3%) 3.1% (0.9%) (1.5%) (8.5%)
             
Six Months Ended June 30th 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 $899,838  $(145,062) $23,300  $274,026  $(304,722) $747,380  
International Welding 281,174  (14,934) 7,168  (6,988) (9,300) $257,120  
The Harris Products Group 141,628  2,126  —  (3,213) (1,901) $138,640  
Consolidated $1,322,640  $(157,870) $30,468  $263,825  $(315,923) $1,143,140  
              
Americas Welding (excluding Venezuela) $853,607  $(125,817) $23,300  $(2,052) $(12,472) $736,566  
Consolidated (excluding Venezuela) $1,276,410  $(138,626) $30,468  $(12,253) $(23,672) $1,132,327  
              
% Change             
Americas Welding   (16.1%) 2.6% 30.5% (33.9%) (16.9%) 
International Welding   (5.3%) 2.5% (2.5%) (3.3%) (8.6%) 
The Harris Products Group   1.5% —  (2.3%) (1.3%) (2.1%) 
Consolidated   (11.9%) 2.3% 19.9% (23.9%) (13.6%) 
              
Americas Welding (excluding Venezuela) (14.7%) 2.7% (0.2%) (1.5%) (13.7%) 
Consolidated (excluding Venezuela) (10.9%) 2.4% (1.0%) (1.9%) (11.3%) 
                 
Contact

Amanda Butler
Director, Investor Relations 
Tel: 216.383.2534
Email: Amanda_Butler@lincolnelectric.com

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