Lincoln Electric Holdings Inc.

02/17/2015 | Press release | Archived content

Lincoln Electric Reports Fourth Quarter And Full Year 2014 Results

Download PDF1.4 MB
Q4 Reported and Adjusted EPS $0.96Full Year 2014 EPS of $3.18, Adjusted EPS of $3.82

CLEVELAND, Feb. 17, 2015 /PRNewswire/ --

Fourth Quarter and Full Year 2014 Key Metric Highlights

  • Q4 reported operating income margin at 15.3% of sales; 15.4% on an adjusted basis
  • FY2014 operating income margin at 13.3% of sales; a record 15.1% on an adjusted basis
  • Record FY2014 cash flows from operations - up 18.5% to $402 million
  • Solid execution with 19.1% ROIC and a record 16.5% average operating working capital ratio
  • Returned a record $380 million to shareholders in FY2014 through share repurchases and dividend payments

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported fourth quarter 2014 net income of $75.2 million, or $0.96 per diluted share. This compares with net income of $88.3 million, or $1.07 per diluted share, in the comparable 2013 period. Adjusted net income in the fourth quarter 2014 was $75.4 million, or $0.96 per diluted share, compared with adjusted net income of $89.2 million, or $1.09 per diluted share, in the comparable 2013 period. The 2013 period includes a benefit of $0.22 per diluted share from our Venezuelan operations, which operates in a hyper-inflationary environment. This compares with no contribution to Adjusted net income from our Venezuelan operations in the fourth quarter 2014.

Sales decreased 4.3% to $684.0 million in the fourth quarter 2014 versus $714.8 million in the comparable 2013 period primarily due to unfavorable foreign currency translation and volume weakness in our South America Welding segment. Operating income for the fourth quarter decreased 11.8% to $104.9 million, or 15.3% of sales, from $118.9 million, or 16.6% of sales, in the comparable 2013 period. Adjusted operating income decreased 12.3% to $105.1 million or 15.4% of sales, compared with $119.9 million, or 16.8% of sales in 2013. Lower 2014 operating income results primarily reflect a challenging year-over-year comparison in our South America Welding segment due to contraction in our Venezuelan operations.

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We ended the year with a strong finish highlighted by compelling results in North America and record performance across key metrics. Steady execution of our '2020 initiatives' helped offset a challenging year-over-year comparison from our Venezuelan business and rising foreign exchange headwinds. I am pleased to report that excluding Venezuela, the business achieved a 130 basis point expansion in operating income margin on an adjusted basis and ten percent growth in EPS in 2014. Looking ahead to 2015, we expect to benefit from our diversified end market and geographic exposure, as well as the strength of our portfolio. While we are cautious about near-term factors such as foreign exchange and oil prices, we expect our strategic initiatives will continue to generate value for all of our stakeholders through the cycle."

Dividend and Share Repurchases

The Company's Board of Directors increased the quarterly cash dividend 26%, from $0.23 per share to $0.29, which was paid on January 15, 2015 to shareholders of record as of December 31, 2014. During the quarter, the Company returned $57.8 million to shareholders through the repurchase of the Company's common shares. The Company's 2015 share repurchase target is $400 million.

Twelve Months 2014 Summary

Net income for the twelve months ended December 31, 2014 was $254.7 million, or $3.18 per diluted share, which includes rationalization and asset impairment charges of $30.9 million and charges of $21.1 million from Venezuelan foreign exchange remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter. This compares with net income of $293.8 million, or $3.54 per diluted share, in 2013. Adjusted net income was $305.9 million, or $3.82 per diluted share, compared with adjusted net income of $313.2 million, or $3.77 per diluted share, in 2013. Adjusted net income for the twelve months ended December 31, 2014 includes earnings of $0.17 per diluted share from the Company's Venezuelan operations as compared with $0.46 per diluted share in the comparable 2013 period.

Sales remained relatively steady at $2.8 billion in the twelve months ended December 31, 2014 as compared with $2.9 billion in the comparable 2013 period. This result reflects lower volumes and unfavorable foreign exchange translation being offset by pricing actions and acquisitions. Operating income for the twelve months ended December 31, 2014 decreased to $373.7 million, or 13.3% of sales, compared with $407.0 million, or 14.3% of sales, in the comparable 2013 period. Adjusted operating income was $424.9 million or 15.1% of sales, compared with $428.4 million, or 15.0% of sales in 2013. Operating income and Adjusted operating income include a $3.9 million gain, $2.5 million after-tax or $0.03 per diluted share, from an insurance settlement.

Webcast Information

A conference call to discuss fourth quarter and full year 2014 financial results will be webcast live today, February 17, 2015, 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 and 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 61512318. Telephone participants are asked to dial in 10-15 minutes prior to the start of the conference call.

Financial results for the fourth quarter and full year 2014 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 47 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 and Adjusted diluted earnings per share are non-GAAP financial measures that management believes 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. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures.

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, including in highly inflationary countries such as Venezuela; 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.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Consolidated Statements of Income

Three months ended December 31,

Fav (Unfav) to Prior Year

2014

% of Sales

2013

% of Sales

$

%

Net sales

$

683,954

100.0

%

$

714,791

100.0

%

$

(30,837)

(4.3%)

Cost of goods sold

452,869

66.2

%

471,744

66.0

%

18,875

4.0

%

Gross profit

231,085

33.8

%

243,047

34.0

%

(11,962)

(4.9%)

Selling, general & administrative expenses

126,002

18.4

%

123,883

17.3

%

(2,119)

(1.7%)

Rationalization and asset impairment charges

166

-

259

-

93

35.9

%

Operating income

104,917

15.3

%

118,905

16.6

%

(13,988)

(11.8%)

Interest income

628

0.1

%

868

0.1

%

(240)

(27.6%)

Equity earnings in affiliates

1,104

0.2

%

1,119

0.2

%

(15)

(1.3%)

Other income

791

0.1

%

1,053

0.1

%

(262)

(24.9%)

Interest expense

(6,704)

(1.0%)

(557)

(0.1%)

(6,147)

-

Income before income taxes

100,736

14.7

%

121,388

17.0

%

(20,652)

(17.0%)

Income taxes

25,401

3.7

%

33,323

4.7

%

7,922

23.8

%

Effective tax rate

25.2

%

27.5

%

2.3

%

Net income including non-controlling interests

75,335

11.0

%

88,065

12.3

%

(12,730)

(14.5%)

Non-controlling interests in subsidiaries'

earnings (loss)

123

-

(259)

-

382

147.5

%

Net income

$

75,212

11.0

%

$

88,324

12.4

%

$

(13,112)

(14.8%)

Basic earnings per share

$

0.97

$

1.09

$

(0.12)

(11.0%)

Diluted earnings per share

$

0.96

$

1.07

$

(0.11)

(10.3%)

Weighted average shares (basic)

77,403

81,132

Weighted average shares (diluted)

78,280

82,184

Twelve months ended December 31,

Fav (Unfav) to Prior Year

2014

% of Sales

2013

% of Sales

$

%

Net sales

$

2,813,324

100.0

%

$

2,852,671

100.0

%

$

(39,347)

(1.4%)

Cost of goods sold

1,864,027

66.3

%

1,910,017

67.0

%

45,990

2.4

%

Gross profit

949,297

33.7

%

942,654

33.0

%

6,643

0.7

%

Selling, general & administrative expenses

545,497

19.4

%

527,206

18.5

%

(18,291)

(3.5%)

Rationalization and asset impairment charges

30,053

1.1

%

8,463

0.3

%

(21,590)

(255.1%)

Operating income

373,747

13.3

%

406,985

14.3

%

(33,238)

(8.2%)

Interest income

3,093

0.1

%

3,320

0.1

%

(227)

(6.8%)

Equity earnings in affiliates

5,412

0.2

%

4,806

0.2

%

606

12.6

%

Other income

3,995

0.1

%

4,194

0.1

%

(199)

(4.7%)

Interest expense

(10,434)

(0.4%)

(2,864)

(0.1%)

(7,570)

(264.3%)

Income before income taxes

375,813

13.4

%

416,441

14.6

%

(40,628)

(9.8%)

Income taxes

121,933

4.3

%

124,754

4.4

%

2,821

2.3

%

Effective tax rate

32.4

%

30.0

%

(2.4%)

Net income including non-controlling interests

253,880

9.0

%

291,687

10.2

%

(37,807)

(13.0%)

Non-controlling interests in subsidiaries'

earnings (loss)

(806)

-

(2,093)

(0.1%)

1,287

61.5

%

Net income

$

254,686

9.1

%

$

293,780

10.3

%

$

(39,094)

(13.3%)

Basic earnings per share

$

3.22

$

3.58

$

(0.36)

(10.1%)

Diluted earnings per share

$

3.18

$

3.54

$

(0.36)

(10.2%)

Weighted average shares (basic)

79,185

81,978

Weighted average shares (diluted)

80,096

83,042

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Non-GAAP Financial Measures

Three months ended December 31,

Twelve months ended December 31,

2014

2013

2014

2013

Operating income as reported

$

104,917

$

118,905

$

373,747

$

406,985

Special items (pre-tax):

Rationalization and asset impairment charges (1)

166

259

30,053

8,463

Loss on the sale of land (2)

-

705

-

705

Venezuela foreign exchange losses (3)

-

-

21,133

12,198

Adjusted operating income (5)

$

105,083

$

119,869

$

424,933

$

428,351

Net income as reported

$

75,212

$

88,324

$

254,686

$

293,780

Special items (after-tax):

Rationalization and asset impairment charges (1)

167

223

30,914

7,573

Loss on the sale of land (2)

-

705

-

705

Venezuela foreign exchange losses (3)

-

-

21,133

12,198

Special items attributable to non-controlling
interests (4)

-

(47)

(805)

(1,068)

Adjusted net income (5)

$

75,379

$

89,205

$

305,928

$

313,188

Diluted earnings per share as reported

$

0.96

$

1.07

$

3.18

$

3.54

Special items

-

0.02

0.64

0.23

Adjusted diluted earnings per share (5)

$

0.96

$

1.09

$

3.82

$

3.77

Weighted average shares (diluted)

78,280

82,184

80,096

83,042

(1)

The three and twelve months ended December 31, 2014 include non-cash asset impairment charges. The twelve months ended December 31, 2014 also includes net rationalization credits including gains on the sale of assets. The three and twelve months ended December 31, 2013 include net charges associated with long-lived asset impairments and severance and other related costs from the consolidation of manufacturing operations partially offset by gains related to the sale of assets, including real estate, at rationalized operations.

(2)

Represents the loss realized related to the sale of land.

(3)

The twelve months ended December 31, 2014 represents the impact of the Venezuelan remeasurement loss related to the adoption of a new foreign exchange mechanism in the first quarter. The twelve months ended December 31, 2013 represents the impact of the devaluation of the Venezuelan currency.

(4)

Represents the portion of special items attributable to non-controlling interests.

(5)

Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures that management believes 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. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands)

(Unaudited)

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data

December 31, 2014

December 31, 2013

Cash and cash equivalents

$

278,379

$

299,825

Total current assets

1,098,677

1,130,775

Property, plant and equipment, net

437,209

484,005

Total assets

1,939,215

2,151,867

Total current liabilities

492,419

456,917

Short-term debt (1)

68,166

15,296

Long-term debt

2,488

3,791

Total equity

1,285,781

1,530,688

Net Operating Working Capital

December 31, 2014

December 31, 2013

Accounts receivable

$

321,862

$

367,134

Inventory

330,840

349,963

Trade accounts payable

202,482

212,799

Net operating working capital

$

450,220

$

504,298

Net operating working capital to net sales (2)

16.5

%

17.6

%

Invested Capital

December 31, 2014

December 31, 2013

Short-term debt (1)

$

68,166

$

15,296

Long-term debt

2,488

3,791

Total debt

70,654

19,087

Total equity

1,285,781

1,530,688

Invested capital

$

1,356,435

$

1,549,775

Total debt / invested capital

5.2

%

1.2

%

Return on invested capital (3)

19.1

%

18.9

%

(1)

Includes current portion of long-term debt.

(2)

Net operating working capital to net sales is defined as net operating working capital divided by annualized rolling three months of sales.

(3)

Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest 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 December 31,

2014

2013

OPERATING ACTIVITIES:

Net income

$

75,212

$

88,324

Non-controlling interests in subsidiaries' earnings (loss)

123

(259)

Net income including non-controlling interests

75,335

88,065

Adjustments to reconcile Net income including non-controlling interests to Net cash

provided by operating activities:

Rationalization and asset impairment charges

127

43

Depreciation and amortization

16,590

17,002

Equity loss (earnings) in affiliates, net

53

(347)

Pension expense

2,761

7,513

Pension contributions and payments

(1,429)

(2,939)

Other non-cash items, net

14,357

(296)

Changes in operating assets and liabilities, net of effects from acquisitions:

Decrease in accounts receivable

28,264

12,545

Decrease in inventories

5,435

23,199

Increase in trade accounts payable

13,669

33,497

Net change in other current assets and liabilities

(24,954)

(80,601)

Net change in other long-term assets and liabilities

3,441

(878)

NET CASH PROVIDED BY OPERATING ACTIVITIES

133,649

96,803

INVESTING ACTIVITIES:

Capital expenditures

(17,560)

(16,324)

Acquisition of businesses, net of cash acquired

(23,338)

(48,225)

Proceeds from sale of property, plant and equipment

411

597

Other investing activities

-

2,500

NET CASH USED BY INVESTING ACTIVITIES

(40,487)

(61,452)

FINANCING ACTIVITIES:

Net change in borrowings

(17,783)

511

Proceeds from exercise of stock options

3,171

4,220

Excess tax benefits from stock-based compensation

2,606

3,629

Purchase of shares for treasury

(57,775)

(54,238)

Cash dividends paid to shareholders

(17,866)

(16,290)

Transactions with non-controlling interests

-

(3,278)

NET CASH USED BY FINANCING ACTIVITIES

(87,647)

(65,446)

Effect of exchange rate changes on Cash and cash equivalents

(6,659)

(389)

DECREASE IN CASH AND CASH EQUIVALENTS

(1,144)

(30,484)

Cash and cash equivalents at beginning of period

279,523

330,309

Cash and cash equivalents at end of period

$

278,379

$

299,825

Cash dividends paid per share

$

0.23

$

0.20

Lincoln Electric Holdings, Inc.

Financial Highlights

(In thousands, except per share amounts)

(Unaudited)

Condensed Consolidated Statements of Cash Flows

Twelve months ended December 31,

2014

2013

OPERATING ACTIVITIES:

Net income

$

254,686

$

293,780

Non-controlling interests in subsidiaries' loss

(806)

(2,093)

Net income including non-controlling interests

253,880

291,687

Adjustments to reconcile Net income including non-controlling interests to Net cash

provided by operating activities:

Rationalization and asset impairment charges

29,574

5,092

Depreciation and amortization

69,607

68,883

Equity earnings in affiliates, net

(1,848)

(1,660)

Pension expense

12,395

29,774

Pension contributions and payments

(36,072)

(87,356)

Other non-cash items, net

44,398

29,461

Changes in operating assets and liabilities, net of effects from acquisitions:

Decrease (increase) in accounts receivable

5,876

(5,437)

(Increase) decrease in inventories

(5,718)

13,310

Increase in trade accounts payable

2,135

794

Net change in other current assets and liabilities

28,345

(4,974)

Net change in other long-term assets and liabilities

(870)

(680)

NET CASH PROVIDED BY OPERATING ACTIVITIES

401,702

338,894

INVESTING ACTIVITIES:

Capital expenditures

(72,990)

(76,015)

Acquisition of businesses, net of cash acquired

(24,230)

(53,161)

Proceeds from sale of property, plant and equipment

17,457

1,393

Other investing activities

778

(1,717)

NET CASH USED BY INVESTING ACTIVITIES

(78,985)

(129,500)

FINANCING ACTIVITIES:

Net change in borrowings

53,331

(1,840)

Proceeds from exercise of stock options

9,116

20,297

Excess tax benefits from stock-based compensation

5,967

10,602

Purchase of shares for treasury

(307,178)

(167,879)

Cash dividends paid to shareholders

(73,261)

(49,277)

Transactions with non-controlling interests

(2,330)

(6,087)

NET CASH USED BY FINANCING ACTIVITIES

(314,355)

(194,184)

Effect of exchange rate changes on Cash and cash equivalents

(29,808)

(1,849)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(21,446)

13,361

Cash and cash equivalents at beginning of period

299,825

286,464

Cash and cash equivalents at end of period

$

278,379

$

299,825

Cash dividends paid per share

$

0.92

$

0.60

Lincoln Electric Holdings, Inc.

Segment Highlights

(In thousands)

(Unaudited)

North

America

Welding

Europe

Welding

Asia Pacific

Welding

South

America

Welding

The Harris

Products

Group

Corporate /

Eliminations

Consolidated

Three months ended December 31, 2014

Net sales

$

429,907

$

97,288

$

58,113

$

32,689

$

65,957

$

-

$

683,954

Inter-segment sales

28,064

3,699

3,176

71

1,821

(36,831)

-

Total

$

457,971

$

100,987

$

61,289

$

32,760

$

67,778

$

(36,831)

$

683,954

EBIT (1)

$

88,456

$

9,429

$

1,715

$

(217)

$

6,380

$

1,049

$

106,812

As a percent of total sales

19.3

%

9.3

%

2.8

%

(0.7%)

9.4

%

15.6

%

Special items (gain) charge (2)

$

-

$

(19)

$

185

$

-

$

-

$

-

$

166

EBIT, as adjusted (4)

$

88,456

$

9,410

$

1,900

$

(217)

$

6,380

$

1,049

$

106,978

As a percent of total sales

19.3

%

9.3

%

3.1

%

(0.7%)

9.4

%

15.6

%

Three months ended December 31, 2013

Net sales

$

410,033

$

111,874

$

63,170

$

63,303

$

66,411

$

-

$

714,791

Inter-segment sales

27,385

6,046

2,327

11

2,396

(38,165)

-

Total

$

437,418

$

117,920

$

65,497

$

63,314

$

68,807

$

(38,165)

$

714,791

EBIT (1)

$

83,902

$

7,752

$

(792)

$

25,187

$

6,415

$

(1,387)

$

121,077

As a percent of total sales

19.2

%

6.6

%

(1.2%)

39.8

%

9.3

%

16.9

%

Special items (gain) charge (3)

$

(57)

$

381

$

640

$

-

$

-

$

-

$

964

EBIT, as adjusted (4)

$

83,845

$

8,133

$

(152)

$

25,187

$

6,415

$

(1,387)

$

122,041

As a percent of total sales

19.2

%

6.9

%

(0.2%)

39.8

%

9.3

%

17.1

%

Twelve months ended December 31, 2014

Net sales

$

1,700,924

$

425,775

$

243,800

$

148,595

$

294,230

$

-

$

2,813,324

Inter-segment sales

124,732

19,586

14,820

144

8,210

(167,492)

-

Total

$

1,825,656

$

445,361

$

258,620

$

148,739

$

302,440

$

(167,492)

$

2,813,324

EBIT (1)

$

335,533

$

47,918

$

(27,314)

$

(5,762)

$

28,563

$

4,216

$

383,154

As a percent of total sales

18.4

%

10.8

%

(10.6%)

(3.9%)

9.4

%

13.6

%

Special items (gain) charge (2)

$

(68)

$

904

$

28,635

$

21,715

$

-

$

-

$

51,186

EBIT, as adjusted (4)

$

335,465

$

48,822

$

1,321

$

15,953

$

28,563

$

4,216

$

434,340

As a percent of total sales

18.4

%

11.0

%

0.5

%

10.7

%

9.4

%

15.4

%

Twelve months ended December 31, 2013

Net sales

$

1,652,769

$

429,548

$

266,282

$

195,895

$

308,177

$

-

$

2,852,671

Inter-segment sales

127,254

19,911

14,906

233

9,605

(171,909)

-

Total

$

1,780,023

$

449,459

$

281,188

$

196,128

$

317,782

$

(171,909)

$

2,852,671

EBIT (1)

$

317,455

$

34,202

$

(4,256)

$

45,108

$

27,826

$

(4,350)

$

415,985

As a percent of total sales

17.8

%

7.6

%

(1.5%)

23.0

%

8.8

%

14.6

%

Special items (gain) charge (3)

$

1,052

$

2,045

$

6,071

$

12,198

$

-

$

-

$

21,366

EBIT, as adjusted (4)

$

318,507

$

36,247

$

1,815

$

57,306

$

27,826

$

(4,350)

$

437,351

As a percent of total sales

17.9

%

8.1

%

0.6

%

29.2

%

8.8

%

15.3

%

(1)

EBIT is defined as Operating income plus Equity earnings in affiliates and Other income.

(2)

Special items in the three and twelve months ended December 31, 2014 include non-cash asset impairment charges. The twelve months ended December 31, 2014 also includes net rationalization credits including gains on the sale of assets. Special items in the twelve months ended December 31, 2014 also include the impact of the Venezuelan remeasurement losses related to the adoption of a new foreign exchange mechanism in the first quarter.

(3)

Special items in the three and twelve months ended December 31, 2013 include net rationalization and asset impairment charges and the impact of the devaluation of the Venezuelan currency.

(4)

The primary profit measure used by management to assess segment performance is EBIT, as adjusted. EBIT for each operating segment is adjusted for special items to derive EBIT, as adjusted.

Lincoln Electric Holdings, Inc.

Change in Net Sales by Segment

(In thousands)

(Unaudited)

Three Months Ended December 31st Change in Net Sales by Segment

Change in Net Sales due to:

Net Sales

2013

Volume

Acquisitions

Price

Foreign

Exchange

Net Sales

2014

Operating Segments

North America Welding

$

410,033

$

5,331

$

15,936

$

2,902

$

(4,295)

$

429,907

Europe Welding

111,874

(2,156)

-

(912)

(11,518)

97,288

Asia Pacific Welding

63,170

(4,866)

-

374

(565)

58,113

South America Welding

63,303

(27,900)

-

13,896

(16,610)

32,689

The Harris Products Group

66,411

4,874

-

(3,927)

(1,401)

65,957

Consolidated

$

714,791

$

(24,717)

$

15,936

$

12,333

$

(34,389)

$

683,954

% Change

North America Welding

1.3

%

3.9

%

0.7

%

(1.0%)

4.8

%

Europe Welding

(1.9%)

-

(0.8%)

(10.3%)

(13.0%)

Asia Pacific Welding

(7.7%)

-

0.6

%

(0.9%)

(8.0%)

South America Welding

(44.1%)

-

22.0

%

(26.2%)

(48.4%)

The Harris Products Group

7.3

%

-

(5.9%)

(2.1%)

(0.7%)

Consolidated

(3.5%)

2.2

%

1.7

%

(4.8%)

(4.3%)

Twelve Months Ended December 31st Change in Net Sales by Segment

Change in Net Sales due to:

Net Sales

2013

Volume

Acquisitions

Price

Foreign

Exchange

Net Sales

2014

Operating Segments

North America Welding

$

1,652,769

$

4,335

$

42,184

$

13,247

$

(11,611)

$

1,700,924

Europe Welding

429,548

8,107

-

(3,722)

(8,158)

425,775

Asia Pacific Welding

266,282

(17,516)

-

1,351

(6,317)

243,800

South America Welding

195,895

(59,554)

-

57,461

(45,207)

148,595

The Harris Products Group

308,177

6,722

-

(18,411)

(2,258)

294,230

Consolidated

$

2,852,671

$

(57,906)

$

42,184

$

49,926

$

(73,551)

$

2,813,324

% Change

North America Welding

0.3

%

2.6

%

0.8

%

(0.7%)

2.9

%

Europe Welding

1.9

%

-

(0.9%)

(1.9%)

(0.9%)

Asia Pacific Welding

(6.6%)

-

0.5

%

(2.4%)

(8.4%)

South America Welding

(30.4%)

-

29.3

%

(23.1%)

(24.1%)

The Harris Products Group

2.2

%

-

(6.0%)

(0.7%)

(4.5%)

Consolidated

(2.0%)

1.5

%

1.8

%

(2.6%)

(1.4%)

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lincoln-electric-reports-fourth-quarter-and-full-year-2014-results-300036714.html

SOURCE Lincoln Electric Holdings, Inc.

Amanda Butler, Director, Investor Relations, Tel: 216.383.2534, Email: [email protected]