Post Earnings Coverage as Lincoln Electric’s Quarterly Sales Jumped 5.5%, Adjusted EPS Climbed 16%

Upcoming AWS Coverage on Snap-on Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 24, 2017 / Active Wall St. announces its post-earnings coverage on Lincoln Electric Holdings, Inc. (NASDAQ: LECO). The Company disclosed its first quarter fiscal 2017 results on April 18, 2017. The manufacturer of specialized welding products and other equipment outperformed sales and earnings expectations. Register with us now for your free membership at:

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One of Lincoln Electric Holdings’ competitors within the Small Tools & Accessories space, Snap-on Inc. (NYSE: SNA), released its 2017 first quarter results prior to the market open on Thursday, April 20, 2017. AWS will be initiating a research report on Snap-on in the coming days.

Today, AWS is promoting its earnings coverage on LECO; touching on SNA. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended March 31, 2017, Lincoln Electric’s sales increased 5.5% to $580.90 million compared to sales of $550.72 million in Q1 2016, driven by 2.9% higher volumes, a 2.1% increase in price, and a 0.6% benefit from acquisitions. Excluding Venezuela from the prior year’s results due to the deconsolidation of the operation, the Company’s sales increased 6.4%, primarily from 3.9% higher volumes and a 2.1% increase in price. Lincoln Electric’s revenue numbers surpassed analysts’ consensus of $568.2 million.

For Q1 2017, Lincoln Electric’s gross profit margin increased 80 basis points to 35.1% compared with 34.3% in the prior year. The improvement was primarily due to higher volumes across business and favorable mix. The Company’s operating income for the reported quarter was $81.5 million, or 14.0% of sales. Lincoln Electric’s adjusted operating income margin was 14.6% of sales, reflecting higher volumes and favorable mix, compared with operating income of $75.3 million, or 13.7% of sales, in the comparable 2016 period.

Lincoln Electric reported Q1 2017 net income of $55.85 million, or diluted earnings per share of $0.84 which includes acquisition transaction costs of $3.6 million, $2.7 million after-tax, or $0.04 EPS, related to the proposed acquisition of Air Liquide Welding compared to net income of $53.64 million, or diluted earnings per share of $0.76. Post adjustment, the Company reported earnings of $0.88 per share, which also surpassed Wall Street’s expectations of $0.79 per share.

Segment Results

During Q1 2017, Lincoln Electric’s Americas Welding segment’s adjusted EBIT margin increased 90 basis points to 16.9% on higher volumes. Sales, excluding Venezuelan results from the prior year, increased 8.3% on 5.6% higher volumes, 1.6% higher price, and 90 basis points from acquisitions.

For Lincoln Electric’s International Welding segment’s adjusted EBIT margin increased 240 basis points to 7.2% on favorable mix and a 2.7% increase in volumes. Volume and price improvements came predominantly from the Asia/Pacific region. The Company’s sales from the European region were up modestly in the reported quarter.

For Q1 2017, Lincoln Electric’s Harris Products Group’s adjusted EBIT margin increased 80 basis points to 11.9% on favorable mix and improved raw material cost trends. Volumes declined 2.9% from challenging comparisons in the retail channel, but the segment achieved growth in other areas of their business, notably in international regions. Price increased 4% on favorable y-o-y year metal cost changes.

Financial Details

During Q1 2017, Lincoln Electric’s cash flow from operations increased significantly y-o-y to $76 million in the quarter. The increase reflects improved Company operating performance and lower pension contributions due to the freeze of Lincoln Electric’s fully funded defined benefit pension plan on December 31, 2016.

Lincoln Electric’s operating working capital ratio improved 190 basis points to 17.1% in Q1 2017 compared with 19% in the prior year’s same quarter. The Company’s cash conversion came in at 110%. Capital expenditures increased to approximately $12 million in the reported quarter. For FY17, Lincoln Electric is maintaining its full year CapEx spending expectation in the range of $65 million to $75 million.

During the reported quarter, Lincoln Electric paid a cash dividend to shareholders of $23 million, reflecting 9% higher dividend payout rate in 2017. Lincoln Electric’s net debt position at March 31, 2017, was $234 million.

Dividend Declared

On April 19, 2017, Lincoln Electric announced that its Board of Directors has declared a quarterly cash dividend of $0.35 per common share, payable on July 14, 2017, to shareholders of record as of June 30, 2017.

Stock Performance

At the close of trading session on Friday, April 21, 2017, Lincoln Electric Holdings’ share price finished the trading session at $87.52, marginally down 0.49%. A total volume of 339.12 thousand shares exchanged hands. The stock has soared 42.00% and 43.10% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 14.62%. The stock is trading at a PE ratio of 29.23 and has a dividend yield of 1.60%.

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