Lincoln Electric Q3 Sales Up 3.5 Percent

Lincoln's third quarter earnings were driven by strong top-line growth and margin contributions from its North America Welding and Europe Welding segments.

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Lincoln Electric Holdings, Inc. (Nasdaq: LECO) reported on Thursday third quarter 2014 net income of $45.7 million, or $0.57 per diluted share, which includes rationalization and asset impairment charges of $29.1 million. This compares with net income of $66.0 million, or $0.80 per diluted share, in Q3 2013 — a 3.5 percent increase.

Adjusted net income was $74.9 million, or $0.94 per diluted share, compared to adjusted net income of $71.1 million, or $0.86 per diluted share, in the comparable 2013 period.

Sales increased 3.5 percent to $715.8 million in the third quarter 2014 versus $691.9 million in the comparable 2013 period. Operating income for the third quarter decreased 20.0 percent to $76.1 million, or 10.6 percent of sales, from $95.2 million, or 13.8 percent of sales, in Q3 2013. Adjusted operating income increased 3.7 percent to $105.2 million or 14.7 percent of sales, compared with $101.5 million, or 14.7 percent of sales in 2013.

Adjusted operating income excludes the effect of rationalization and asset impairment charges of $29.1 million. These non-cash asset impairment charges primarily related to a planned divestiture of manufacturing capacity in the Asia Pacific Welding segment of $32.4 million partially offset by net gains of $3.4 million primarily representing a gain on the sale of real estate. These actions are part of continuing strategic repositioning initiatives in the region to improve mix, profitability, and returns.

Christopher L. Mapes, Chairman, President and Chief Executive Officer stated, "We are pleased with the underlying quality of our earnings this quarter, which were driven by strong top-line growth and margin contributions from our North America Welding and Europe Welding segments. This performance more than offset a challenging year-over-year comparison from our Venezuela business.  Looking ahead, improving end market trends and demand for our innovative solutions combined with benefits from our strategic initiatives and accelerated returns, position us well to continue to deliver value to all of our stakeholders."

Year-to-date net income was $179.5 million, or $2.22 per diluted share. This compares YTD net income of $205.5 million, or $2.47 per diluted share, in the same period 2013. Adjusted net income was $230.5 million, or $2.86 per diluted share.

Year-to-date sales remained relatively steady at $2.1 billion and the comparable 2013 period. This result reflects lower volumes and unfavorable foreign exchange translation being offset by pricing actions and acquisitions. YTD operating income decreased to $268.8 million, or 12.6 percent of sales, compared to $288.1 million, or 13.5 percent of sales, in the comparable 2013 period. Adjusted operating income increased 3.7 percent to $319.9 million or 15.0 percent of sales.

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