Q2 2022 Earnings Call

Lincoln Electric Holdings (NASDAQ: LECO) Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Greetings, and welcome to the Lincoln Electric 2022 second quarter financial results conference call. [Operator instructions]. It is my pleasure to introduce your host, Amanda Butler, vice president of investor relations and communications. Thank you. You may begin. Amanda Butler — Vice President, Investor Relations and Communications Thank you, Dylan, and good morning, everyone. Welcome to Lincoln Electric’s second quarter 2022 conference call. We released our financial results earlier today, and you can find our release as an attachment to this call’s slide presentation as well as on the Lincoln Electric website at lincolnelectric.com in the investor relations section. Joining on the call today is Chris Mapes, Lincoln’s chairman, president, and chief executive officer; Gabe Bruno, our chief financial officer; and Steve Hedlund, our chief operating officer. Chris and Steve will begin with a discussion and overview of our results and business trends. Gabe will cover our quarterly financial performance in more detail. And finally, Chris will conclude with a review of updated assumptions for the year. And following our prepared remarks, we’re happy to take your questions. SPONSORED: 10 stocks we like better than Lincoln Electric Holdings When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now… and Lincoln Electric Holdings wasn’t one of them! That’s right — they think these 10 stocks are even better buys. *Stock Advisor returns as of July 27, 2022 This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy . Before we start our discussion, please note that certain statements made during this call may be forward-looking, and actual results may differ materially from our expectations due to a number of risk factors. A discussion of some of the risks and uncertainties that may affect our results are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. In addition, we discussed financial measures that do not conform to U.S. GAAP, and a reconciliation of non-GAAP measures to the most comparable GAAP measure is found in the financial tables in our earnings release, which again is available in the Investor Relations section of our website at lincolnelectric.com. And with that, I’ll pass the call over to Chris Mapes. Chris? Chris Mapes — President, Chairman, and Chief Executive Officer Thank you, Amanda. Good morning, everyone. Turning to Slide 3. We I’m pleased to report another quarter of record sales, profitability, earnings, and returns. The organization did an excellent job capitalizing on growth and effectively manage the challenging operating environment. Demonstrating the success of our customer-first approach and the strong execution of our commercial and operational Higher Standard 2025 Strategy initiatives. We achieved record sales of $970 million, led by 21% organic growth on 17% higher price and a 3% increase in volumes, including a solid 10% increase in volumes in our Americas welding segment. We benefited 3% from acquisitions which partially offset a 6% unfavorable impact from foreign exchange. We achieved record second quarter profitability with a 17.3% adjusted operating margin and a 30% incremental margin. We are maintaining strong operating leverage from the team’s effective management of inflation, supply chain constraints, and the improved operational execution in automation and Europe. These factors helped to offset higher employee costs and unfavorable foreign exchange. Adjusted earnings per share increased 31% to $2.18, a record performance. Additionally, we achieved a record 26.3% return on our invested capital and generated solid cash flows in the quarter. We returned approximately $58 million to shareholders in the quarter through dividends and share repurchases bringing our year-to-date returns to $196 million, which includes $130 million of share repurchases. And now […]

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